Is quality accreditation effective? Evidence from the childcare market

Mo Xiao

doi:10.1016/j.ijindorg.2010.04.004

Is quality accreditation effective? Evidence from the childcare market

Mo Xiao

Economics

Research output: Contribution to journal › Article › peer-review

24 Scopus citations

Abstract

The ineffectiveness of a quality accreditation mechanism can be attributed to the inability of the accreditation status to provide consumers with information they do not already possess. I present a structural model of demand allowing consumers to infer quality from both accreditation status and firm reputation. I then estimate this model to assess the effectiveness and the impact of the national accreditation system for childcare centers on consumer welfare. My results suggest that disregarding the endogeneity of firms' accreditation choices significantly underestimates the effectiveness of the accreditation system. However, on average consumers do not gain much information beyond what they have inferred from a firm's reputation. The estimates of structural parameters are then used to quantify the value of this information to consumers.

Original language	English (US)
Pages (from-to)	708-721
Number of pages	14
Journal	International Journal of Industrial Organization
Volume	28
Issue number	6
DOIs	https://doi.org/10.1016/j.ijindorg.2010.04.004
State	Published - Nov 2010

Keywords

Certification
Child care
Information
Quality

ASJC Scopus subject areas

Industrial relations
Aerospace Engineering
Economics and Econometrics
Economics, Econometrics and Finance (miscellaneous)
Strategy and Management
Industrial and Manufacturing Engineering

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10.1016/j.ijindorg.2010.04.004

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title = "Is quality accreditation effective? Evidence from the childcare market",

abstract = "The ineffectiveness of a quality accreditation mechanism can be attributed to the inability of the accreditation status to provide consumers with information they do not already possess. I present a structural model of demand allowing consumers to infer quality from both accreditation status and firm reputation. I then estimate this model to assess the effectiveness and the impact of the national accreditation system for childcare centers on consumer welfare. My results suggest that disregarding the endogeneity of firms' accreditation choices significantly underestimates the effectiveness of the accreditation system. However, on average consumers do not gain much information beyond what they have inferred from a firm's reputation. The estimates of structural parameters are then used to quantify the value of this information to consumers.",

keywords = "Certification, Child care, Information, Quality",

author = "Mo Xiao",

note = "Funding Information: I am deeply indebted to my dissertation committee members V. Joseph Hotz, John Riley, Dan Ackerberg and Kenneth Sokoloff for their consistent inputs. I thank Tasneem Chipty, Ann Witte, and Ellen Kisker for providing data. I also thank Andrew Ching, Hongbin Cai, Harold Demsetz, Paul Devereux, Phillip Leslie, Jean-Laurent Rosenthal, Duncan Thomas, Bill Zame, seminar participants at UCLA, Brown, Iowa State, Southern Methodist, USC, Rochester, and participants of the 2003 North American Econometric Society Summer Meetings for helpful comments. This research was funded by a grant from the National Institute for Child Health and Human Development (R01 HD035382). The author is solely responsible for the contents of the paper. ",

year = "2010",

month = nov,

doi = "10.1016/j.ijindorg.2010.04.004",

language = "English (US)",

volume = "28",

pages = "708--721",

journal = "International Journal of Industrial Organization",

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AU - Xiao, Mo

N1 - Funding Information: I am deeply indebted to my dissertation committee members V. Joseph Hotz, John Riley, Dan Ackerberg and Kenneth Sokoloff for their consistent inputs. I thank Tasneem Chipty, Ann Witte, and Ellen Kisker for providing data. I also thank Andrew Ching, Hongbin Cai, Harold Demsetz, Paul Devereux, Phillip Leslie, Jean-Laurent Rosenthal, Duncan Thomas, Bill Zame, seminar participants at UCLA, Brown, Iowa State, Southern Methodist, USC, Rochester, and participants of the 2003 North American Econometric Society Summer Meetings for helpful comments. This research was funded by a grant from the National Institute for Child Health and Human Development (R01 HD035382). The author is solely responsible for the contents of the paper.

PY - 2010/11

Y1 - 2010/11

N2 - The ineffectiveness of a quality accreditation mechanism can be attributed to the inability of the accreditation status to provide consumers with information they do not already possess. I present a structural model of demand allowing consumers to infer quality from both accreditation status and firm reputation. I then estimate this model to assess the effectiveness and the impact of the national accreditation system for childcare centers on consumer welfare. My results suggest that disregarding the endogeneity of firms' accreditation choices significantly underestimates the effectiveness of the accreditation system. However, on average consumers do not gain much information beyond what they have inferred from a firm's reputation. The estimates of structural parameters are then used to quantify the value of this information to consumers.

AB - The ineffectiveness of a quality accreditation mechanism can be attributed to the inability of the accreditation status to provide consumers with information they do not already possess. I present a structural model of demand allowing consumers to infer quality from both accreditation status and firm reputation. I then estimate this model to assess the effectiveness and the impact of the national accreditation system for childcare centers on consumer welfare. My results suggest that disregarding the endogeneity of firms' accreditation choices significantly underestimates the effectiveness of the accreditation system. However, on average consumers do not gain much information beyond what they have inferred from a firm's reputation. The estimates of structural parameters are then used to quantify the value of this information to consumers.

KW - Certification

KW - Child care

KW - Information

KW - Quality

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ER -

Is quality accreditation effective? Evidence from the childcare market

Abstract

Keywords

ASJC Scopus subject areas

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