Does Public Pre-K Have Unintended Consequences on the Child Care Market for Infants and Toddlers?

Abstract

I estimate the impact of public pre-kindergarten for 4-year-olds on the provision of private child care for younger children by considering New York City's 2014 Universal Pre-K expansion. Private child care facilities often care for children from infancy or toddlerhood through pre-K. A public option for older children could therefore affect availability, prices, or quality of care for younger children. This effect could be positive or negative depending on the structure of the child care market, the design of the public pre-K program, and parent preferences. I use a panel dataset covering all licensed child care facilities in New York City and a difference-in-differences strategy that compares changes over time for neighborhoods with more versus fewer new public pre-K sites. I estimate that the public pre-K program reduced the capacity for children younger than 2 years old at private child care centers by 2,700 seats. The entire decrease in capacity occurs in areas with high poverty, and this decline was not offset by an increase in provision in the home day care market. In complementary analysis, I find a within-center increase in public complaints and inspection violations for day care centers that are closer to new public pre-K sites, suggesting a decrease in quality due to the increased competition from public pre-K. A back-of-the-envelope calculation indicates that for every seven 4-year-olds who shifted from day care centers to public pre-K, there was a reduction of one day care center seat for children under the age of 2.