TY  - JOUR
AU  - Blau,David M.
AU  - Mocan,H. Naci
TI  - The Supply of Quality in Child Care Centers
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 7225
PY  - 1999
Y2  - July 1999
UR  - http://www.nber.org/papers/w7225
L1  - http://www.nber.org/papers/w7225.pdf
N1  - Author contact info:
David Blau
Department of Economics
Ohio State University
445 Arps Hall
1945 N. High St.
Columbus, OH 43210-1172
E-Mail: blau.12@osu.edu

Naci H. Mocan
Department of Economics
Louisiana State University
2119 Patrick F. Taylor Hall
Baton Rouge, LA 70803-6306
Tel: 225/578-4570
E-Mail: mocan@lsu.edu
AB  - We use data from a sample of day care centers to estimate the relationships between cost and the quality of the child care service provided, and between revenue and quality. We use a measure of child care quality derived from an instrument designed by developmental psychologists. This measure of quality has been found to be positively associated with child development. Taking the estimated cost-quality and revenue-quality relationships as given, we then estimate the objective functions of the firms and compute the supply function for quality. The results indicate that (1) the estimated cost function is inconsistent with the implications of cost-minimization; (2) for-profit firms operate at a positive level of marginal cost, but non-profit firms operate at zero or negative marginal cost; (3) revenue is positively but weakly associated with quality; and (4) the supply of quality is inelastic, with point estimates of the supply elasticity of .04-.05 for both for-profit and non-profit firms. Implications of the results for child care policy are discussed.
ER  -