THE MIXED PRESCHOOL MARKET - EXPLAINING LOCAL VARIATION IN FAMILY DEMAND AND ORGANIZED SUPPLY

Prior research reveals wide variation in the number of independent pre schools and child-care centers. Some analysts have alluded to supply ' 'shortages'', while others attribute ''uneven'' center distribution to economic and demographically induced variations in demand. Combining a 100-county sample of preschools with 1990 census data, we address th is classic identification issue by simultaneously estimating supply an d demand. Price shows predictably negative effects on hours demanded. More are purchased in poorer counties with proportionately more black single-parents and rapid population growth. Supply responds to price. Also, hours supplied are greater in counties with more developed publi c sectors and where richer input mixes are used. Parents accept center accreditation as a quality indicator: it significantly increases dema nd. In contrast, regulations requiring accreditation depress supply. F inally, our results indicate that public provision crowds-out the numb er of private hours used, mainly through a weakly negative but signifi cant impact on demand. [JEL I21] Copyright (C) 1996 Elsevier Science L td