Unintended consequences: Regulating the quality of subsidized day care

Advocates for the poor frequently support uniform, high federal standards for subsidized social services. While such standards may improve the quality of services for those who qualify, they can also have unintended but important side effects. Stringent regulations may actually curtail the supply of services, promote segregation, and expand the role of large subsidized for-profit firms. All these possibilities are illustrated by the history of federal regulation in subsidizing child day care. The federal government's retreat from regulation in 1980 and 1981 may have had results that—even if unintended—were in many ways salutary.