Parents of young children tend to have low incomes relative to their permanent income, but may face borrowing constraints that reduce their ability to pay for high-quality care
The benefits of quality care accrue not just to the parent(s) but also to the child and to society more generally. Parents may take all or part of the benefit to their child into account, but not benefits that are external to the family. Such benefits include lower costs for subsequent schooling (reduced probability of grade retention and special education, for example), future reductions in crime, increased productivity that results in higher productivity for others, payment of higher taxes find out here, and possibly lower costs for social services. Improving child care quality may affect grade school classrooms by increasing the proportion of children in the class who have strong language and cognitive skills. By the same token, poor-quality child care may undermine grade school classrooms by increasing the numbers of children with academic and social deficits. Unsafe and unhealthy child care may result in reduced productivity for others, when parents are absent from their jobs, caring for injured or ill children. Adding these benefits to the parent’s demand for higher-quality care should shift the demand curve for quality care to the right (that is, increase demand for higher-quality care at every price). Continue reading »