Child Care Quality and Regulation

I have been reading and writing a lot about childcare throughout the last year. Something I never thought I would do, but turns out to be quite interesting actually. It is also something I can talk to people about, which I was never able to do with the other things I have been working on. So I thought I would write up the few basic insights I’ve gained in researching this topic.

1. The quality of interactions between a child and its caregiver matters more than the frequency. What follows from this insight is that neither group size nor the ratio of children per staff matter all that much, but teacher training is essential. The cool thing is that the literature in early childhood psychology is in basic agreement with the economics literature regarding this insight.
2. When it comes to teacher training, the most important variable seems to be whether the caregiver has taken a college level class in early childhood education in the last year. This is something that friends of ours have confirmed anecdotally: they have three daughters and they have been hiring female students enrolled in USU’s Family Life Studies program, which combines various fields within the family, human development, and consumer science disciplines, as nannies. Our friends have reported that whenever their nannies have recently taken classes in early childhood development, their kids got to do many activities that are more engaging and would learn new things quickly. In fact, when asked how the nannies came up with the activities they would say things like “We learned this in class a few weeks ago and I thought I’d try it out.”
3. Things that negatively affect childcare outcomes are low teacher pay and high teacher turnover. Both of those variables are highly correlated as you might expect, since poorly paid childcare staff tend to be less committed to their jobs than better-paid staff.
4. European child care facilities tend to have better educated staff that receive higher pay than American day care center staff, largely because limits for child/staff ratios and group-size limits are not as low in Europe (this is not true for all European countries or all American states, but the consensus seems to be that on average child/staff ratios are higher in Europe).
5. One other problem with US childcare regulation is that small family day care homes, i.e. mothers taking care of a few other children in addition to their own in their own residence, are regulated in many states, which makes it difficult for such small family day care homes to operate. In order to operate legally, they have to undergo a number of health and safety inspections (not in all states but in a large number of states). Often, the cost of compliance is too high to warrant legal operation. This type of regulation severely constraints entry into the market for child care provision and as every econ 101 student knows, lower supply results in higher prices.
6. Another effect of this regulation is that because parents are relatively price sensitive, increasing regulatory cost often result in lower staff wages rather than being passed on to parents. As explained above, lower staff wages are one of the main culprits of creating a high quality care environment.

Overall, the lesson that I draw from this is that deregulation of staff-child ratios and groups size limits, as well as the removal of most health and safety standards for small family day care homes would result in better quality childcare outcomes in the US as well as lower prices. Currently health and safety are elevated as standards while childcare quality is largely neglected. Returning some of the decision making rights over how safe a care environment has to be to parents would lower barriers to entry into the child care sector, lower the cost of care, and probably also result in higher wages for child care staff (even though that may seem counterintuitive). I know not all parents may be well informed, but I do think that all parents have enough interested in their child’s health and safety that they would not drop them off at a day care construction site that does not follow any safety standards. Another thing I know for sure is that with snow on the ground 8 months out of the year, day care centers and homes in Utah do not have to have an outdoor play area to provide good care, even though that is one of the things they are required to have.