Abstract: I estimate the impact of public pre-kindergarten for 4-year-olds on the provision of private child care for younger children by considering New York City’s 2014 Universal Pre-K expansion. Private child care facilities often care for children from infancy or toddlerhood through pre-K. A public option for older children could therefore affect availability, prices, or quality of care for younger children. This effect could be positive or negative depending on the structure of the child care market, the design of the public pre-K program, and parent preferences. I use a panel dataset covering all licensed child care facilities in New York City and a difference-in-differences strategy that compares changes over time for neighborhoods with more versus fewer new public pre-K sites. I estimate that the public pre-K program reduced the capacity for children younger than 2 years old at private child care centers by 2,700 seats, and this decline was not offset by an increase in provision in the home day care market. The entire decrease in capacity occurs in areas with high poverty. In complementary analysis, I find a within-center increase in public complaints and inspection violations for day care centers that are closer to new public pre-K sites, suggesting a potential decrease in quality due to the increased competition from public pre-K. A back-of-the-envelope calculation indicates that for every seven 4-year-olds who shifted from day care centers to public pre-K, there was a reduction of one day care center seat for children under the age of 2.
Works in Progress
“The Impact of a Long-Term Care Information Campaign on Long-Term Care Insurance Purchase”
Abstract: This paper estimates the effect of an information campaign urging individuals to plan ahead for their long-term care needs on the purchase of long-term care insurance. Long-term care expenses represent a large, mostly uninsured risk for the elderly, and Medicaid payments for long-term care expenses total more than $150 billion annually. In an effort to curtail these expenses, the federal government partnered with 25 states over the course of 5 years to run the “Own Your Future” campaign. Using a difference-in-differences strategy that takes advantage of the staggered timing of the rollout and restricted data from the Health and Retirement Study, I find that the campaign increased long-term care insurance coverage by one percentage point, an increase of about ten percent. Although the increase is concentrated among high-asset individuals, a back-of-the-envelope calculation indicates modest Medicaid savings of $300 million in present value. This estimate represents a lower bound for the total savings from the program since individuals may have made adjustments on other margins.
“Mandated Benefits, Imperfect Information, and Moral Hazard: An Application to Temporary Disability Insurance”
Abstract: Although standard mandated benefit theory assumes workers know about their benefits, in reality, they may be unaware of their benefits. This paper presents empirical evidence using the Current Population Survey which suggests that workers in the five states with Temporary Disability Insurance (TDI) are largely unaware of their coverage under the law. When individuals value a benefit, they take it into account when making their labor supply decisions, partially or fully offsetting the reduction in employment from the implicit tax. If individuals do not know about a benefit, then their labor supply curves do not shift, but moral hazard is also reduced, lowering program cost. This paper presents a model of these offsetting forces with an application to state TDI laws and asks whether a public information campaign would increase employment and reduce deadweight loss. The results show that over a broad range of parameters, the additional employee valuation of the benefit outweighs the additional program cost from moral hazard, and thus that a public information campaign would increase employment.