"How Does Public Pre-K Affect the Child Care Market?" (Job Market Paper)

Draft coming soon.

Investments in child care are extended in recent years to increase access to the high-quality child care. Among the new policies was expanding pre-k options by providing public pre-k free for everyone. However, an expansion in the public provision may crowd out private child care provider. In this paper, I study how universal pre-k affects the welfare, and how it impacts the market structure, using data from Minnesota. I estimate a structural model of demand where the consumers choose a child care provider for each age group, namely infant, toddler and preschooler. In order to account for potential crowd out, I also estimate an entry model where child care providers decide whether to enter the market or stay out depending on their cost structure and the anticipated profits. I find that new public pre-k programs account for a 10% decline in the private daycare seats available.

"Intangible Capital and Competition in Ride Sharing: The Case of Lyft-Motivate Merger" (with Suleyman Gozen)

This study focuses on estimating the role of intangible capital on firms’ competitiveness. We use Lyft’s acquisition of Motivate, the biggest bike sharing company in the U.S. at the time, to evaluate the degree to which intangible capital affects the competition between Lyft and Uber. By acquiring Motivate, Lyft gained more consumer data as we interpret intangible capital, and bikes’ presence on the streets potentially helped Lyft build stronger brand salience by rebranding bikes. We estimate the effect of the acquisition on Lyft’s ridership by using a triple-difference model, and employing trip-level ride sharing data from New York City before and after the acquisition. We find that the acquisition helped Lyft increase its ridership by around 6%.

"The Effect of Voluntary Pre-K and School Readiness Plus on Child Care Supply in Rural Minnesota" (with Elizabeth Davis)

The State of Minnesota offered new funds for high-quality child care for pre-k kids provided in public school districts. Relying on the profits from preschoolers, private child care providers faced increased competition for the pre-k kids. The loss in profits likely decreased their profits to the extent that they can no longer cover fixed costs. This may lead to exit of child care providers that also serve other age groups, which in turn leads to less seats available for infants and toddlers over- all. In this paper, we study how Voluntary Pre-K (VPK) and School Readiness Plus (SRP) programs affected the family child care providers in rural Minnesota. We use the variation in the timing and location in the VPK and SRP rollout to identify the effect of these programs on the number of child care providers, and the total seats available, as well as the average price and enrollment for each age group. We find that new public pre-k programs account for a 10% decline in the private daycare seats available. We also find that the effect is mostly through family-based provider exits.

"Does emergency funds help childcare providers survive during the COVID-19 pandemic?"(with Jonathan Borowsky, Elizabeth Davis and Aaron Sojourner)

The child care sector has seen a sharp decline in enrollment especially in the first months of the Covid-19 pandemic. In addition, costs per child increased as a result of increased expenditures on cleaning supplies and PPE, and physical distancing guidelines. In response to the challenges the child care industry faced, state governments provided financial support to keep child care providers open. We study how early support for child care providers during the Covid-19 pandemic affect their survival by focusing on the Minnesota Peacetime Emergency Child Care Grant program. The state allocated $40 million to child care providers through a competitive grant process between April 2020 and June 2020. The state used a selection method based on several criteria, which translated into numerical scores with grants allocated to the providers with the highest scores in each region and of each type of care (family- or center-based). The selection criteria were mostly based on the location of the provider. For example, providers within a city that has more hospitals and more critical facilities, or providers within a county with a higher percentage of essential workers’ families received a higher score. As these characteristics potentially correlate with other unobserved factors that determine the likelihood of survival, we cannot directly estimate the effect of the grant on survival by comparing the survival rate of the grant recipients with the non-recipients. To address the endogeneity problem, we employ a regression discontinuity design using the score cutoffs and the administrative boundaries as a source of natural experiment. We use the dataset of grant applications to identify the scores and the grant amounts each applicant received. We estimate the effect of receiving the grant on the likelihood of survival using both the standard regression discontinuity with score as the cutoff, and the spatial regression discontinuity using the administrative boundaries as the cutoff. The results will help inform policymakers about the efficacy of providing large grants quickly to help sustain the child care sector.

“A Note on Informality and Public Trust” (with Ceyhun Elgin), Economics Bulletin, 2017, 37 (4), 2595-2601.

Empirical evidence shows that the level of informality is negatively correlated with the public trust in government. In this paper, we aim to account for this observation by constructing a model where government type cannot be directly observed by households. We characterize the Markov perfect equilibrium and show that public trust may account for the presence as well as persistence of informality.