Childcare over the Business Cycle

Jessica H. Brown and Chris M. Herbst

Journal of Labor Economics, 2022, vol. 40, issue S1, S429 - S468

Abstract: We estimate the impact of macroeconomic conditions on the childcare market. We find that the industry is substantially more exposed to the business cycle than other low-wage industries and responds more strongly to negative shocks than positive ones. Indeed, childcare employment requires more time to recover than the rest of the economy. Although the reduction in supply may pose difficulties for parents, we find evidence that center quality is countercyclical. When unemployment rates are higher, childcare workers have on average higher levels of education and experience, turnover rates are lower, and consumer reviews on Yelp are higher.

Date: 2022
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