The economic and contracting issues of in-home child care: the nanny market

Abstract

This thesis is an industry study of the market for in-home child care--a market which has developed rapidly in the past 10 years. The economic considerations discussed herein are the market-making characteristics of demand (for nannies), supply (availability of an appropriately skilled labor pool--from both the legal and illegal market), price (wage levels and premiums) and the contracting issues of asymmetric information, search costs, transaction costs, uncertainty and risk. The market is best-explained as a search model and its behavior is driven by solutions to contracting problems.