The Impact of Covid-19 on the U.S. Child Care Market: Evidence from Stay-at-Home Orders

29 Pages Posted: 23 May 2020

See all articles by Umair Ali

Umair Ali

Arizona State University (ASU) - School of Public Affairs

Chris M. Herbst

Arizona State University (ASU) - School of Public Affairs

Christos Makridis

Massachusetts Institute of Technology (MIT) - Sloan School of Management

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Abstract

Stay-at-home orders (SAHOs) have been implemented in most U.S. states to mitigate the spread of COVID-19. This paper quantifies the short-run impact of these containment policies on the supply of and demand for child care. The child care market may be particularly vulnerable to a SAHO-type policy shock, given that many providers are liquidity-constrained. Using plausibly exogenous variation from the staggered adoption of SAHOs across states, we find that online job postings for early care and education teachers declined by 13% after enactment. This effect is driven exclusively by private-sector services.Indeed, hiring by public programs like Head Start and pre-kindergarten has not been influenced by SAHOs. In addition, we find little evidence that child care search behavior among households has been altered. Because forced supply-side changes appear to be at play, our results suggest that households may not be well-equipped to insure against the rapid transition to the production of child care. We discuss the implications of these results for child development and parental employment decisions.

Keywords: child care, coronavirus, COVID-19, early care and education, stay-at-home orders

JEL Classification: H75, J21, I28

Suggested Citation

Ali, Umair and Herbst, Chris M. and Makridis, Christos, The Impact of Covid-19 on the U.S. Child Care Market: Evidence from Stay-at-Home Orders. IZA Discussion Paper No. 13261, Available at SSRN: https://ssrn.com/abstract=3608510

Umair Ali (Contact Author)

Arizona State University (ASU) - School of Public Affairs ( email )

Farmer Building 440G PO Box 872011
Tempe, AZ
United States

Chris M. Herbst

Arizona State University (ASU) - School of Public Affairs ( email )

Box 870603
Tempe, AZ 85287
United States

Christos Makridis

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

100 Main Street
E62-416
Cambridge, MA 02142
United States

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