A Rising Tide That Lifts All Boats? Effects of Competition on Child Care Quality and Medium-Term Student Outcomes

Abstract

Using administrative data of center-based child care providers in North Carolina from 2005 to 2018, we provide the first direct evidence on the effects of competition on provider quality and student outcomes in the context of early care and education, taking advantage of quality measures from the state’s Quality Rating and Improvement System (QRIS). We found that competition was associated with higher quality ratings and a higher probability to achieve a five-star rating—the highest tier in the QRIS. More competition increased providers’ probability to improve their rating and reduced the time to improve. Compared to public schools, private providers were responsive to competition. However, we did not find any effects of competition on district-level student third-grade academic performance.