The Role of Licensing Regulations in Explaining Family Child-Care Business Closings

The number of family child-care providers has been declining nationally for more than 2 decades, raising concerns about the availability of and access to child care for families at the local level. Many states have enacted new licensing regulations for family child-care providers over the last decade that some in the family child-care community have viewed as burdensome and intrusive. We focus on two major changes in regulations in Minnesota: new health and safety regulations requiring additional trainings in 2014 and expanded background check regulations in 2017. Using interrupted time series analysis, we find that the rate of providers exiting the child-care market (i.e., closing their businesses) was not higher after the state enacted these regulations. To further examine factors related to family child-care closings, we estimate monthly and annual survival analysis models predicting business closures. Our monthly results suggest that the 2014 health and safety regulations and the 2017 background checks were associated with a decreased likelihood of exit rather than an increase. These results imply that ensuring care environments are safe and healthy may be feasible without a large negative impact on child-care supply.