The availability of child care centers, perceived search costs and parental life satisfaction

Abstract

The supply of formal childcare has expanded in many developed countries. However, there is ambiguity in the theory whether the entry of care providers increases consumers' surplus in a market with differentiated services, such as childcare. This study empirically investigates how perceived search costs and parental life satisfaction change when actual childcare availability is altered. It exploits the new panel data from Australia on the number of center-based childcare places per 100 children within a household's residential area. The results show that an increase in the availability of center-based childcare is associated with a decrease in perceived difficulty in finding 'good quality' childcare, as well as an increase in mothers' satisfaction with the amount of free time available. These findings imply that the local availability of center-based childcare has enhanced the subjective well-being of parents.