The Influence of Local Price and Availability on Parents’ Choice of Child Care

Abstract

The striking variation in patterns of child care usage across states reflects differences in family characteristics, but may also reflect exogenous differences in local child care markets. Type of care selected will be influenced by the availability, cost, and accessibility of supply in the child care market as well as by family and child characteristics and cultural preferences. This study contributes to the growing literature on parental demand for child care by using a recent detailed data set from the state of Minnesota. We link household-level data on child care usage and family characteristics with county-level data on average provider rates and availability by type of care in order to estimate multinomial logit models analyzing the family, child, and market characteristics that predict type of care. Our analysis shows that using a relative or friend to care for a child is largely determined by availability, and choice of family care providers is most responsive to price for employed mothers. The types of care chosen by mothers who are not in the paid labor force differ substantially from the choices of employed mothers, and their use of center care is influenced by the prices of both center and family providers. Attitudes towards relative care are also shown to influence type of care chosen.