I use an hedonic price theory approach to estimate the demand for child care quality. Two complementary surveys, the National Child Care Survey, 1990 (NCCS) and the Profile of Child Care Settings Study (PCS), allow me to derive an implicit price for staff-to-child ratio. I use this price as an explanatory variable in a demand equation for this quality attribute. Direct purchase-of-service contracts or voucher programs, by subsidizing only those providers that satisfy state regulatory requirements, effectively lower the implicit price of regulated attributes, such as staff- to-child ratio. Results of this study suggest that such tied subsidies have almost no influence on the demand for child care quality.

Alison P. Hagy is an economist at the Center for Economic Studies, U.S. Bureau of the Census. She would like to acknowledge the support of the Department of Economics at Pomona College where she was a Visiting Assistant Professor of Economics when this work was completed. She would like to thank David Blau, Charles Clotfelter, Cecelia Conrad, William Gentry, Marjorie McElroy, Tom Mroz, Carol Rapaport, Jeff Wooldridge, and an anonymous referee for helpful comments and suggestions. She also benefitted from comments by the participants of the Summer Research Workshop at the Institute for Research on Poverty, University of Wisconsin-Madison and the participants of the Duke-UNC Labor Workshop. The author accepts full responsibility for all remaining errors. This research was supported by the National Institute of Child Health and Human Development, National Research Service Award HD07168 from the Center for Population Research, NICHD to the Carolina Population Center, University of North Carolina at Chapel Hill. The data used in this article can be obtained beginning November 1998 through October200l from the author at the following address: Bureau of the Census-CECON, Room 211 WPII, 4700 Silver Hill Road, STOP 6300, Washington, DC 20233-6300.