My fellow dad-blogger Chad Skeleton (the Curious Dad, Vancouver Sun), posted a very interesting entry on the economics of childcare. Last year, we were in the dilemma of waiting for a spot to open at our facility of choice for son. Scrambling to find an interim solution was certainly one of the most challenging things we faced as a new parents. We were just calling left right and centre any home or licensed daycare facility that was available in our area to see if a spot was available.
Here's a short excerpt explaining why Child Care spaces don't follow the normal forces of supply and demand:
"The most likely reason for long waiting lists is that the highest quality preschools tend to be not-for-profit, and they face different incentives than for-profit firms. For example, they may use subsidized space (e.g. a church basement), and would find it very costly to expand capacity. There may also be pressure to keep fees relatively low rather than charging what the market will bear; for example if parents are on the board of directors, they may act as insiders for the benefit of current attendees. Also, subsidizers such as churchs, firms, and social agencies may require low fees. Non-profits pay higher wages than for-profits, so additional revenues may go toward increased pay, rather than capacity expansion.
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...found that despite the difference in quality on average between non-profit and for-profit child care, it is feasible (i.e. there are examples) for for-profits to produce high quality care. Why don't they do it much? My evidence suggests lack of willingness to pay by parents, something you suggested. Well-educated parents generally have a strong willingness to pay for high quality care, but the average American household does not. The relatively few high quality for-profits tend to be in affluent areas."
For the full blog entry, visit The Curious Dad.


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