The Family Child Care Decision: A Transaction Cost Approach

Abstract

"In recent decades, women's participation in the formal labor force increased dramatically. In 1960, 37 percent of women participated in the civilian labor force. By 1990, the rate of participation increased to 58 percent. This trend is particularly pronounced for women in their prime child bearing years (ages 25 to 34). Participation for this age group increased from 36 percent in 1960 to 74 percent in 1990. The increased labor force participation of women in their child bearing years results in a concommitant demand for child care services. 1991 statistics indicate that when mothers of young children are employed about one-third are cared for in the home by the father or other adult, one-third are cared for in another home, and the remaining third are in organized child care facilities (Bureau of the Census, 1994). The number of organized child care facilities increased from around 13,000 in 1982 to over 40,000 in 1987 (Census of Service Industries, 1987). As a result of these trends, child care entered the U.S. domestic policy agenda. In fiscal year 1992 and 1993, the federal government funded more than 90 early childhood programs in 11 federal agencies and 20 offices (GAO, 1994a). These programs use diverse policy instruments such as regulation, subsidies, and targeted funding to achieve their goals."