NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Canada's Universal Childcare Hurt Children and Families

"Children's outcomes have worsened since the program was introduced along a variety of behavioral and health dimensions. "

The percent of mothers who work in the paid labor force in North America has been rising, and the increased demand for childcare accompanying the rise of two-earner couples has captured the attention of public policymakers. In both Canada and the United States, there are large subsidies for early child care for low-income families, with modest tax subsidies for middle- and upper-income families for either childcare or pre-school. But interest has been growing in moving towards more universal subsidies towards early childcare along the lines of many nations in Europe. In Canada, the province of Quebec introduced universal subsidies to childcare over the period 1997-2000, and a major point of contention in the recent Parliamentary election was the extension of similar programs nationwide. In the United States, universal pre-school programs have been passed by states such as Georgia, New York, and Oklahoma, and there is a major battle shaping up over a ballot initiative for universal pre-school in California. Unfortunately, these debates are raging largely in an evidence vacuum.

In Universal Childcare, Maternal Labor Supply, and Family Well-Being (NBER Working Paper No. 11832), authors Michael Baker, Jonathan Gruber, and Kevin Milligan measure the implications of universal childcare by studying the effects of the Quebec Family Policy. Beginning in 1997, the Canadian province of Quebec extended full-time kindergarten to all 5-year olds and included the provision of childcare at an out-of-pocket price of $5 per day to all 4-year olds. This $5 per day policy was extended to all 3-year olds in 1998, all 2-year olds in 1999, and finally to all children younger than 2 years old in 2000. Since welfare reform and other changes were occurring for single mothers over this time period, the authors focus on the effects of this policy on the married and cohabiting women and their children who received most of the new subsidies under this policy. They use data from the National Longitudinal Study of Canadian Youth (NLSCY), a large longitudinal survey of children inside and outside of Quebec, to develop the first comprehensive analysis of a universal subsidized childcare program, following its impact from childcare use through employment and finally to children's and parent's outcomes.

The authors first find that there was an enormous rise in childcare use in response to these subsidies: childcare use rose by one-third over just a few years. About a third of this shift appears to arise from women who previously had informal arrangements moving into the formal (subsidized) sector, and there were also equally large shifts from family and friend-based child care to paid care. Correspondingly, there was a large rise in the labor supply of married women when this program was introduced.

Disturbingly, the authors report that children's outcomes have worsened since the program was introduced along a variety of behavioral and health dimensions. The NLSCY contains a host of measures of child well being developed by social scientists, ranging from aggression and hyperactivity, to motor-social skills, to illness. Along virtually every one of these dimensions, children in Quebec see their outcomes deteriorate relative to children in the rest of the nation over this time period. Their results imply that this policy resulted in a rise of anxiety of children exposed to this new program of between 60 percent and 150 percent, and a decline in motor/social skills of between 8 percent and 20 percent. These findings represent a sharp break from previous trends in Quebec and the rest of the nation, and there are no such effects found for older children who were not subject to this policy change.

The authors also find that families became more strained with the introduction of the program, as manifested in more hostile, less consistent parenting, worse adult mental health, and lower relationship satisfaction for mothers.

The authors caution that their results are subject to a number of interpretations that highlight the importance of future work in this area. Most importantly, it is not clear whether the negative child outcomes are short-run transitions or long-term effects. Nevertheless, they caution that this subject requires more study before recommendations can be made about the long-run benefits of universal childcare

-- Les Picker

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