Child Care Quality: Does It Matter and Does It Need to be Improved? (Full Report). Is There an Economic Justification for Public Intervention to Improve the Quality of Child Care, Especially for Children from Lower-Income Families?

05/24/2000

Market failure, the presence of externalities, and an argument for equality of opportunity all call for public sector intervention in the child care market. The primary form of market failure is the lack of information for parents regarding quality of care which is tied to the difficulty in measuring quality, the lack of availability of high quality care, and the need for child care for irregular hours such as weekend and late shifts.

Benefits of quality child care accrue to other members of society, including all children in schools with children who had child care; taxpayers, who are likely to save in costs of future schooling by reduction in special education and grade retention; employers, who benefit from more productive employees; and citizens, who gain in terms of future reductions in crime and use of transfer programs. Subsidizing child care for low-income families is also consistent with the goals of the 1996 welfare reform and an ideology that wishes to encourage and reward work. Finally, to the extent that high-quality child care provides benefits to children and their families, there is an argument for providing equal opportunity for such programs to children in low-income families.

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