Provision of Child Care: Cost Functions for Profit-Making and Not-for-Profit Day Care Centers / Swati Mukerjee, Ann Dryden Witte, Sheila Hollowell.

Format:

Book

Author/Creator:

Mukerjee, Swati.

Contributor:

National Bureau of Economic Research.

Witte, Ann Dryden.

Hollowell, Sheila.

Series:

Working Paper Series (National Bureau of Economic Research) no. w3345.

NBER working paper series no. w3345

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Provision of Child Care

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1990.

Summary:

This paper estimates cost functions for day care centers in Massachusetts. The production technology assumed is the generalized homothetic Cobb-Douglas production function. The cost function dual to this production function is estimated separately for profit-making (P1Os) and not-for-profit (NPOs) organizations. The results are discussed in the context of current NPO literature. NPOs are found to be operating at higher average coats than PMOs for most output levels as predicted by the literature. However, the provision of more staff per child hour, our measure of quality, increases coats by similar amounts in PMOs and NPOs. Further, present forms of subsidies do not help either PMOs or NPOs, and in fact, promote 'shirking' in NPOs. PMOs are not optimizing with reference to the amount of education and experience in their personnel. The results suggest that experienced labor may be working for less than its marginal product in the day care industry.

Notes:

Print version record

April 1990.