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Childcare quality and pricing: evidence from Wisconsin

Benjamin Artz and David M. Welsch

Applied Economics, 2014, vol. 46, issue 35, 4276-4289

Abstract: Childcare prices vary dramatically both between and within states. We identify the effects of demographic and provider characteristics on childcare pricing, but focus primarily on whether unique government-provided information on childcare quality has an effect on pricing. Using provider-level observations across three adjacent counties in southern Wisconsin, we find that this government-provided information on childcare quality does not significantly affect pricing. Recognizing that information asymmetry may be the root cause of the insignificant relationship, we test the relationship further within multiple subsamples and with alternative models. Only the lowest quality childcare providers are significantly associated with lower prices in areas that we hypothesize suffer from greater information asymmetry.

Date: 2014
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DOI: 10.1080/00036846.2014.955256

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