Regulation and the Cost of Child Care

Female labor market choices depend on the availability, affordability, and quality of child care. In this paper, we evaluate different regulatory measures and their effect on both the quality and the cost of child care. First, we analyze data on regulations and costs to estimate the effect of regulatory measures on the cost of child care. Next, we summarize the existing literature on the effect of regulation on child care quality. We find that regulation intended to improve quality often focuses on easily observable measures of the care environment that do not necessarily affect the quality of care but that do increase the cost. Thus, we find that the regulatory environment could be improved by eliminating costly measures that do not affect quality of care.