The determinants of interaction quality in Australian child care: A Production-Function Approach

Abstract: Using a unique data set of Australian long day care centres and kindergartens, this paper uses regression analysis to analyze the separate contributions of teacher, classroom, service and child characteristics to the production of interaction quality in 2010 and 2011.  In the E4Kids data set collected through the University of Melbourne's Graduate School of Education, there are about 250 classrooms with data on the CLASS and several sub-scales of the ECERS-R as observational quality measures in each year; director, teacher and parent questionnaires provide detailed measures of inputs to quality. The theoretical framework of this paper derives from production theory in economics; inputs are combined by producers to produce desired outputs. In this case, the desired output is child care services of a particular quality level.  Estimation of a production function for quality is estimation of a causal relationship; the key variables included in the estimation are inputs that are presumed to determine quality.  Production theory, together with a review of relevant studies, provides a basis for model selection: for inclusion of variables presumed to produce quality, and for omitting variables that may be correlated with quality but are not inputs to quality.    U.S. studies have found that some key determinants of child care centre quality are unobserved (unmeasured teacher abilities or unmeasured centre or director characteristics); if these unobserved inputs are correlated with included inputs, the estimated contribution of the included inputs will be biased.  With this data set, the presence of multiple classrooms in some centres allows us to use fixed effects models to control for normally unobserved centre effects.  Detailed information from individual teachers allows us to reduce the likelihood that unobserved teacher effects bias our estimates. The availability of detailed financial and price data for many services allows us to consider the effect of normally unobserved financial resources on the production of quality in early childhood education and care services.