Association for Public Policy Analysis & Management

Over the last decade, states have invested heavily in improving early childhood education (ECE) programs. Improvement efforts typically target individual teachers and programs, through professional development opportunities (Hamre et al., 2017) and curricular decisions (Duncan et al., 2015). While improving the effectiveness of existing programs and teachers is clearly critical to quality improvement efforts, a second, largely-overlooked driver of quality improvement may be program closures and entrants. Due to data limitations, no studies have explored quality differences between exiting, staying, and entering ECE programs, or measured the extent to which market exits and entrants contribute to system-wide quality improvements.

We fill this gap using unique data from North Carolina’s Quality Rating and Improvement System (QRIS), which includes all ECE programs in the state including private child care centers, school-based programs, Head Start, and home-based settings. Our data contain all programs operating over a six-year period (N = 10,318 unique programs between 2009 and 2014). We have detailed information about program quality standards, staff education credentials, scores from the Early Childhood Environmental Rating Scale (ECERS-R or FDCRS), and a summative star rating (1-5) that summarizes the underlying measures. Our paper begins by documenting substantial improvements on multiple ECE quality measures over the study period among both home-based and center-based programs. However, our key aim is to understand how these improvements occurred. We decompose the ECE market into three types of providers: closures (programs that were observed in 2009, but not in 2014), stayers (programs that were observed for all six years of the panel), and entries (programs that were not observed in 2009 but were observed in 2014).

Our results indicate high levels of instability. More than a quarter of center-based providers and more than half of home-based providers operating in 2009 were closed by 2014. Across all sectors, programs that eventually closed were rated substantially lower on nearly all quality measures in 2009, relative to stayers. For example, closures were much more likely to be designated one- or two-star programs relative to stayers, and they rated lower on the ECERS-R. Importantly, closing centers were also rated lower on quality than new entrants. We do also find encouraging evidence of within-program improvements on nearly all quality measures among center-based providers that were open over the entire study period. However, our results suggest that changes in market composition explained more of the system-level quality changes over this period than did within-program improvements. This is particularly the case for home-based providers, where we observe lower-quality programs exiting, but find very little evidence of within-program quality improvements over time.

The rapid introduction of market-based policies in ECE such as QRIS is built on the notion that low-quality programs either improve or risk closure, and that exits are replaced by higher quality market entries. Our results provide the first empirical evidence of the important role of program closures in early childhood quality improvement efforts.