"This paper analyzes recent changes in the potential demand for child care by families due to the rapid increases in female labor force participation and the move toward nuclear families ... The paper is divided into six sections. The first section provides a brief literature review of earlier studies on the supply of day care in Mexico and places this paper in the context of research on the determinants of women's labor force participation. The next section provides background information on the evolution of women's labor force participation and family structure that suggests that the demand for non-family child care is likely to have increased dramatically over the past two decades. The third presents descriptive information on the patterns of child care currently used by Mexican families. The fourth section discusses the available information on the history, rationale, structure, coverage and costs of formal sector day care in Mexico. The fifth section provides insight into the social security reform in the area of day care, and a discussion of policies that are currently under consideration. The final section provides a summary and presents policy recommendations. The data used in this paper are from the 1987 National Survey of Fertility and Health (Encuesta Nacional sobre Fecundidad y Salud-ENFES), and the National Income and Expenditure Surveys of 1989 and 1992 (Encuesta Nacional de Ingresos y Gastos de los Hogares-ENIGH) ... Information on the use and supply of government-provided day-care comes primarily from the Mexican Social Security Institute (Instituto Mexican del Seguro Social-IMSS)."--Introduction, leaves 1-2.