THE DEMAND FOR CHILD-CARE QUALITY - AN HEDONIC PRICE THEORY APPROACH

I use an hedonic price theory approach to estimate the demand for chil d care quality. five complementary surveys, the National Child Care Su rvey: 1990 (NCCS) and the Profile of Child Care Settings Study (PCS), allow me to derive an implicit price for staff-to-child ratio. I use t his price as an explanatory variable in a demand equation for this qua lity attribute. Direct purchase-of-service contracts or voucher progra ms, by subsidizing only those providers that satisfy state regulatory requirements, effectively lower the implicit price of regulated attrib utes, such as staff-to-child ratio. Results of this study suggest that such tied subsidies have almost no influence on the demand for child care quality.