How does child care affect family well-being?

Responsible researcher: Viviane Pires Ribeiro

Paper Title: Universal child care, maternal labor supply, and family well-being

Authors: Michael Baker, Jonathan Gruber and Kevin Milligan

Intervention Location: Quebec/Canada

Sample Size: Not specified

Big topic: Health

Variable of Main Interest: Childcare

Type of Intervention : Analysis of the impact of policy change on family well-being

Methodology: Differences-in-differences model

A full assessment of publicly funded child care requires answers to questions that have not been addressed clearly and collectively in the literature. In view of this gap, Baker, Gruber and Milligan (2008) analyze the introduction of highly subsidized and universally accessible child care in Quebec, addressing the impact on the use of child care, maternal labor supply and family well-being. The study results suggest caution for other provinces in Canada considering adopting the Quebec child care model. It's possible the findings are short-term rather than long-term effects, but more evidence is needed before the program is adopted elsewhere.

Assessment Context

It can be seen that over the last generation there has been a substantial increase in the proportion of working mothers in the paid workforce in North America. In Canada, the employment rate for mothers with at least one child under age 6 rose from 31% in 1976 to 67% in 2004. However, this trend was not offset by a decline in the proportion of working parents, requiring greater use of paid and unpaid child care. In that same country, the percentages of children under age 6 who were being cared for by someone other than their parents increased from 40% in 1994–95 to 51% in 2002–3.

Currently, increased child care subsidies are being targeted at low-income families in Canada; Middle- and upper-income families receive modest tax subsidies for daycare or preschool. But interest is growing in more universal subsidies for early childhood care/education, as offered in many European nations. In 1997, for example, the provincial government of Quebec in Canada introduced a new set of family policies, including major changes to government subsidies for child care. The centerpiece was a child care program to provide regulated spaces for all children aged 0 to 4 in Quebec, with a parental contribution of $5.00 per day. Children were eligible regardless of whether their parents were working or not. The program was implemented gradually, starting with 4-year-olds in September 1997. Subsequently, 3-year-olds became eligible in September 1998, 2-year-olds in 1999, and 0 and 1-year-olds in September 2000.

Universal access to early childhood care has several advantages. Public financing systems can provide more equitable access to quality child care and lead to greater labor supply among secondary workers. At the same time, public systems require extensive public financing, which comes at the cost of higher taxes and therefore reduced economic efficiency. Furthermore, it is possible that publicly provided child care will “crowd out” private provision of care, with no net increase in child care use or labor supply to the market. Finally, and most importantly, there is an ambiguous effect on child outcomes depending on the implications of time spent in child care versus time spent with parents.

Intervention Details

A full assessment of publicly funded child care requires answers to three questions. First, does public funding affect the quality or quantity of care provided, or does it simply lead to the substitution of one form of care for another? Second, if child care use increases, how large is the associated increase in parental labor force participation and what does this suggest about the net cost of the policy? Third, what effect do any changes in child care (and associated increases in labor force participation) have on child and family outcomes? Thus, Baker, Gruber, and Milligan (2008) argue that previous studies of child care policy offer, at best, incomplete answers to one or two of these questions and that there has been no evaluation of a large-scale public intervention that addresses all of the issues. three questions.

Therefore, the study carried out by the authors provides such an assessment using a major policy innovation in the Canadian province of Quebec in the late 1990s. Quebec's Family Policy began in 1997 with the extension of full-day kindergarten to all children aged 5 years and the provision of child care at a price of US$5.00 per day for all children over 4 years of age. This $5.00 per day policy was extended to all 3-year-olds in 1998, all 2-year-olds in 1999, and finally all children under 2 in 2000. This drastic policy change in one of Canada's largest provinces provides a research project to evaluate the effect of publicly funded child care.

The analysis is based on the National Longitudinal Survey of Children and Youth (or more specifically, the National Longitudinal Survey of Children and Youth – NLSCY). The NLSCY is a continuous panel dataset that tracks the progress of a large, nationally representative sample of Canadian children. In this sense, the authors measured the impact of the policy change on mothers' labor supply, the use of daycare centers and the outcomes of children and parents. Because the program's concurrent reforms make it difficult to infer single mothers, the authors focused on married women and their children.

Methodology Details

The NLSCY dataset provides information about a rich set of child care options, as well as tracking parent and teacher assessments of children's development, test scores, and class rankings. The sample size is, on average, about 2000 children at each age per year. For this reason, Baker, Gruber, and Milligan (2008) used the weights provided by the survey in all results presented. The primary sample consists of children aged 0 to 4 years, although for some robustness checks children aged 8 to 11 years are also considered. Five-year-olds were excluded to isolate the effect of the child care program from the effect of kindergarten. The main sample restriction was to include only children from two-parent families.

The authors estimated difference-in-differences models comparing outcomes in Quebec and the rest of Canada at the time of the reform. The “pre-reform” period was termed waves 1 and 2 of the NLSCY, covering the period from 1994-95 to 1996-97. The “post-reform” period is waves 4 and 5 of the NLSCY, 2000–2001 and 2002–3.

The procedure produces intention-to-treat effects, as the authors estimated the effects of the reduced form for children, and not just for families who chose child care. This has the advantage of potentially capturing the full impact of the program across subsidized and unsubsidized care arrangements, as well as any peer externalities. Furthermore, due to some uncertainty regarding the answers to the child care questions in the survey, the approach allows some flexibility in deciding by what treatment probability the intention-to-treat effects should be scaled to arrive at the impact of the treatment on the treated.

Results

The results found by Baker, Gruber, and Milligan (2008) indicate that the introduction of universal subsidies for child care in Quebec led to a significant increase in the use of care. The proportion of children aged 0 to 4 in care increased by 14 percentage points in Quebec compared to the rest of the country. This increase in child care was associated with a considerable increase in the employment of women in two-parent families. Employment grew by 7.7 percentage points in Quebec. The difference between the increase in employment and the increase in child care use primarily reflects the reduction in the use of informal child care arrangements, or the “crowding out” of informal child care by this new subsidized child care. In part, as a result of this large exclusion, taxes generated by the new maternal labor supply fall short of paying the costs of increased child care subsidies.

Consistent and robust evidence of negative effects of policy change on a range of child outcomes, parenting, and parenting outcomes was also found. Child outcomes are worse for a variety of parent-reported measures, such as anxiety, aggression, motor and social skills, child health status, and illness. Measures of parenting and family function have also been negatively affected, and there is evidence of deterioration in parental health and reduced quality of the parental relationship. To our knowledge, the effects on parenting and family outcomes have not been previously investigated. Therefore, the results suggest that in this case, more access to child care was bad for children and parents across the dimensions captured in the data. There are, however, interpretations of these findings that are more benign. Although some of these explanations appear inconsistent with the data, it is not possible to rule out the possibility that the findings represent a short-term adjustment to child care rather than a long-term negative impact.

Public Policy Lessons

The study by Baker, Gruber, and Milligan (2008) provides the first comprehensive analysis of a universal subsidized child care program, tracking its impact from child care use to employment and, ultimately, child and parental outcomes. Strong evidence was found of a shift towards new childcare use, although approximately a third of recently reported use appears to come from women who previously worked and had informal arrangements. The impact of labor supply is highly significant. Overwhelming evidence has also been reported that children's outcomes have worsened since the program was introduced. Suggestive evidence was found that the families studied became more stressed with the introduction of the program. This manifests itself in increased aggression and anxiety for children; more hostile and less consistent parenting for adults; and worse adult mental health.

The authors emphasize that such results are subject to a series of interpretations that highlight the importance of future work in this area. More importantly, it is unclear whether negative child outcomes are just short-term problems or portend long-term effects. Furthermore, the study raises the puzzle of why families would take advantage of a policy that leads to worse child outcomes, worse parenting, and worse parenting outcomes. It is possible that the other unmeasured benefits of higher family income offset these costs. Alternatively, it is possible that families will learn that they are no better off under this new regime that the ultimate use of subsidized child care may fall. Again, tracking the long-term evolution of these policy effects will be central to a full analysis of program welfare.

Despite these caveats, the results are particularly relevant to ongoing political debates in the United States and Canada. The estimates are silent on the effectiveness of targeted child care subsidies for groups such as single mothers, but these are generally not the focus of the current debate. Instead, it is the universal expansion of early childhood care/education that attracts the most heated arguments. More directly, the study's evidence advises caution in Canada for other provinces considering adopting the Quebec child care model. It's possible the findings are short-term rather than long-term effects, but more evidence is needed before the program is adopted elsewhere.

References

BAKER, Michael; GRUBER, Jonathan; MILLIGAN, Kevin. Universal child care, maternal labor supply, and family well-being. Journal of political economy , vol. 116, no. 4, p. 709-745, 2008.