Association for Public Policy Analysis & Management

This study examines how ECE subsidy policy designs affect the supply of care, especially high-quality care, with attention to underserved and economically-disadvantaged families. Although there is a lot of evidence that ECE subsidies can increase human capital accumulation, especially for children from disadvantaged families, there is very limited research on the supply responses to ECE subsidy policies to help guide policymakers who want to understand the tradeoffs in alternative policy designs with respect to subsidy-delivery mechanisms. Combining restricted-use provider-level panel data from the state Department of Human Services (DHS) on the universe of licensed and license-exempt ECE providers with geo-referenced synthetic family with children under age five simulated based on Census data, and leveraging the multiple Minnesota ECE policy funding streams that has been dramatically changed through multiple programs of different designs in recent years, we use difference-in-difference methods to exploit the large time and geographic variation in Minnesota ECE policy that unfolded in recent years to estimate differential ex post effects of alternative subsidy designs on families’ access in dimensions of quality, proximity and affordability as well as provider behaviors including entry/exit and pricing. We analyze the effects of these policy changes in time and geography on families’ access to ECE services using the measures developed in our earlier work (Davis, Lee and Sojourner, 2018) as outcomes, with attention to impacts on disparities by family race, ethnicity, income, and urbanicity.