Child-Care Rating System Effective in Nudging Centers, Parents to High Quality

September 28, 2017

By Christina Samuels

Nearly all states—with a substantial financial boost in recent years from the U.S. Department of Education—have created or are working to build rating systems for their child-care programs.

The theory is that parents will seek out higher-rated providers and that the evaluation system gives an incentive to child-care centers to improve themselves. And a new working paper released by the National Bureau for Economic Research suggests that in North Carolina, both are happening.

The research showed that North Carolina centers on the cusp of earning a higher star rating tended to make the changes necessary to get that higher rating. There's a financial incentive to do so: In North Carolina, higher-rated programs receive a higher reimbursement rate for children whose care is paid for through state subsidies.

The study, published Monday, also showed that lower-rated programs dropped in enrollment, which suggests that parents preferred programs that met a higher standard.