Improving Outcomes in Child Care Subsidy Voucher Programs under Regional Asymmetries

Priyank Arora, Wei Wei and Senay Solak

Production and Operations Management, 2021, vol. 30, issue 12, 4435-4454

Abstract: Related to several efforts by governments to attain United Nations Sustainable Development Goals, subsidy vouchers are used to provide monetary support to income‐eligible (IE) families who cannot afford child care. However, IE families are often unable to accept an offered voucher due to an inadequate supply of voucher‐accepting child care providers that best suit their needs. Child Care Resource and Referral agencies (CCR&Rs), which administer these programs, can influence the family's propensity to accept a voucher by investing funds both in outreach to increase the number of voucher‐accepting providers in each region, and in provider services to improve the service delivery to families. This study analyzes how a CCR&R should allocate its limited funds between these two types of activities to ensure equitable access to child care across the different regions of its service area. We show that it might be optimal for the CCR&R to invest more funds in outreach in the region with a lower proportion of IE families. This is especially true when: the external considerations (e.g., public transportation and infrastructure) in that region have a greater impact on a family's acceptance propensity; the marginal return of investment in outreach in that region is higher and abundant funds are available; the socioeconomic distress experienced by families in that region is significantly higher; or a large amount of funds is earmarked for outreach in that region. We contextualize our study for a CCR&R in Massachusetts and conclude that the proposed investment decisions can improve equity outcomes by 7.0%.

Date: 2021
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