The supply of formal childcare has expanded in many developed countries. There is
ambiguity, however, in the theory that the entry of care providers increases consumers’
surplus and the welfare of households in a market with differentiated services, such as
childcare. This study empirically investigates how perceived search costs and parental life satisfaction change when actual childcare availability is altered. It exploits the new panel data from Australia on the number of center-based childcare places per 100 children within a household’s residential area. The results show that an increase in the availability of centerbased
childcare is associated with a decrease in perceived difficulty in finding ‘good quality’ childcare, as well as an improvement in mothers’ satisfaction with the increased availability of free time. These findings imply that the local availability of center-based childcare has
enhanced the subjective well-being of parents.