August 17, 2015

Regulations Create Two-Class Child Care System

Diana Thomas

Associate Professor of Economics, Creighton University
Summary

In a new working paper published by the Mercatus Center at George Mason University, Devon Gorry and I investigate what causes the high cost of child care in this country. We find that the regulatory burden daycare centers must meet is one of the primary causes of the high cost of care.

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For most lower- and middle-class families, non-parental child care in a daycare center is a luxury that is beyond reach. In Mississippi, the cost of sending a child to daycare equals roughly 25 percent of the income of a family living at the poverty level. In Massachusetts, the same service costs on average 86 percent of the income of a family at the poverty level. The high cost of formal child care at a daycare center leaves most families looking for other options – and those options often include unlicensed, black-market providers.

There's a two-class system of child care in this country: high-cost, regulated care for high-income families and lower-cost, unregulated care for lower-income families.

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