Unintended consequences of child care regulations

The effects of regulations governing staff-child ratio, group size, and staff qualifications in child care centers are estimated, using data on a sample of centers. The data contain measures of staff characteristics and wages, price of the service, and the developmental quality of the child care provided. Regulations vary across states, but may be endogenous to these outcomes. Estimates with state fixed effects are feasible because regulations vary within states by age group of children and job title of staff. Estimates with state fixed effects show that tougher regulations have some impact on input use, but have little or no impact on price and quality. The most striking finding is that tougher regulations reduce staff wages, suggesting that the incidence of child care regulations is on employees of day care centers.