Wednesday, May 29, 2013


Government programs for early childhood education have expanded in recent
decades. Two states illustrate this trend. Georgia expanded its preschool
program to all age-eligible residents in 1995, enabling money from the state
government to follow children to the government-certified provider of their
parents' choice. Oklahoma adopted universal preschool in 1998, offering it
through the state's existing public school system. As one would expect, these
different subsidy methods led to substantial differences in the market for

In Does State Preschool Crowd-out Private Provision? The Impact of Universal
Preschool on the Childcare Sector in Oklahoma and Georgia (NBER Working Paper
No. 18605
), Daphna Bassok, Susanna Loeb, and Maria Fitzpatrick analyze the
effect of these expansions in universal preschool for 4-year-olds in Georgia and
Oklahoma, both on the total amount of formal childcare provided and on the
outcomes for public-versus-private childcare providers.

They find that in both states, new publicly funded childcare centers tended to
increase the total number of childcare providers, indicating that government
intervention can increase preschool use. In Georgia, where universal preschool
mandated 6.5 hours of daycare and cost $4,298 per child in 2010-11, the
childcare sector expanded by 25 percent. Georgia's Pre-Kindergarten program
allowed students to enroll in either public or private preschools, and the
observed expansion of childcare occurred in both the public and private sectors.
The majority of the participants in the publicly funded preschool program
enrolled in public or private centers that were in operation before the new
mandate took effect.

In Oklahoma, where about 90 percent of the universal preschool slots are
provided through the public school system, both half (2.5 hour) and full (6
hour) days are allowed. Average spending in 2010-11 was $3,461. The number of
formal childcare providers increased by 30 percent after the program took
effect, although almost all of that increase (90 percent) took place in the
public sector.

The authors find that government subsidized programs increased the availability
of childcare in rural areas even more than in other parts of Georgia and
Oklahoma. This finding suggests that efforts to expand preschool use may be most
productive when targeted at areas with initially lower levels of supply.

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