Good child care is essential both to children’s development and parents’ ability to work, but it’s too expensive for many families. Some states give families vouchers to use at private child care centers. Our Aaron Sojourner and fellow researchers Won Fy Lee, Elizabeth E. Davis and Jonathan Borowsky looked at Minnesota’s voucher program, the largest child care assistance program in the state. Their research was published in the Spring 2025 issue of the Journal of Human Capital at the University of Chicago. An open access version is available as an Upjohn Institute working paper. We asked Sojourner about the research and its implications; responses are edited for length and clarity.
What made you want to explore this specific research question?
AARON SOJOURNER: While there’s growing recognition that early childhood experiences have lifelong effects and growing interest in investing to improve these experiences, we lack evidence about the best ways to make those investments or how they affect markets for early childhood care and education, or ECE, services. We expected these public investments to raise prices for families who don’t receive the vouchers, but we didn’t know by how much. This study aimed to develop credible evidence about the size of such effects so people could see the size of tradeoffs in the policy.
Programs providing vouchers for private child care are common, but there hasn’t been much research on the providers themselves. Why is this?
In general, America has very low quality data on private ECE providers. Minnesota is one of the few states that has provider-level data on prices over time as well as locations and capacities. We had to build up the datasets over many years on multiple relevant programs and their changes over time and place by integrating data from multiple agencies. Even the state had never done this. So the data requirements were imposing.
You found that an extra $100 investment per local young child spurs new providers to open and raises costs only slightly – 4 percent more slots and only 0.3 percent higher prices for parents, which sounds like a great result. Is this program a more efficient investment than a public-provider program or another approach?
It’s a good question but we largely lack comparable evidence on other programs, so it’s hard to compare yet. One might expect that direct public provision reduces private market prices by pulling consumer service demand away from the private providers. However, public and private providers still must compete for staff, the largest cost input for care services. So there’s not an easy theoretical answer here. More research is needed to nail this down!
Have there been any developments in Minnesota on this front since you first shared your findings?
The state has raised the value of vouchers it provides to families, so that more providers will accept them and participating families have more options that are accessible to them.
What can policymakers in other states take from this now, even before there’s research specific to their states?
The big takeaway is that increased investment in families’ ability to choose and access private providers does increase the quantity of care available in the community without much increase in the price of care. Supply seems responsive to meet new effective demand. Quantities grow, rather than incumbent providers just grabbing the new dollars by raising prices. There are many reasons these results could inform the policy in other states. The economics of child care are similar all over the country, though state regulations differ and that may matter.
What are the next steps for research on this?
We are examining how childcare stabilization grants to private providers affected quantities of customers served, staff employed, worker and customer turnover rates, and worker job quality. These grants became popular during the pandemic but haven’t been much studied. How much do providers use the resources to serve more children, serve them better, and pay staff more, and how much do they just pocket the extra resources?
Similarly, we are examining how the expansion of school-based pre-kindergarten programs affects job quality in the entire sector and how it affects children’s long run outcomes. We are glad to have financial support from the Washington Center for Equitable Growth and the Sloan Foundation for these projects.
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