The tendency of many states and cities has been to invest in preschool, since they can link these programs with the public education system. While preschool is an excellent public investment, child care policy should begin at birth rather than in the year or two before kindergarten. In fact, a preschool-only approach can have unintended consequences on the price and supply of infant and toddler child care; many providers use revenues from larger classes of older children to subsidize the high costs associated with infant care. 8 When public preschool crowds out the market for private tuition preschool, providers can no longer cross-subsidize the cost-intensive care of infants and toddlers, leading to fewer slots and higher prices.

This report analyzes the economic effects of access to child care for families with children under the age of 3. The author uses the U.S. Census Bureau's Survey of Income and Program Participation (SIPP) to understand the challenges facing families with very young children and the opportunity to improve their lives by investing when children are young. This dataset contains information on what families report spending on child care, the types of care arrangements that they use, as well as the dynamics of income and debt for parents with very young children.