Canada: Universal Childcare Not Good for the Kids

A recent study by Michael Baker, Jonathan Gruber, and Kevin Milligan at the NBER point towards Quebec’s universal childcare subsidies being bad for children.

The author’s first finding is shocking…shocking I say!

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.

Subsidize and activity and you get more of it. Whodathunkit?

However, what is interesting is the following,

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 (National Longitudinal Study of Canadian Youth) 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.

This doesn’t mean that childcare is bad for kids (although this could be the case). The rise in childcare is due to subsidies from the government. It is quite possible that part of the problem is due to things like over crowding, inadequate facilities, etc. In fact, these results might diminish or even disappear once the childcare industry adjusts to the influx of new children. Still, it points out at the very least that prior to enacting some sort of universal childcare subsdiy/program that whatever lead to the deterioration of child well being is corrected.

Personally, my view is that it is the government doing something and generally, the government does things badly. Although a subsidy program does minimize this problem. Theoretically, the parents do have choice in terms of how to use the subsidy for childcare. The problems though is when the government wants to ensure that the subsidy is “spent wisely” and requires enrollment at “approved childcare facilities” and other such measures. This has the effect of limiting the supply, limiting choice and can lead to worse outcomes than simply giving parents the cash value of the subsidy.

This is definitely an important bit of research, but as the summary notes, much more is needed.

FILED UNDER: Economics and Business, , ,
Steve Verdon
About Steve Verdon
Steve has a B.A. in Economics from the University of California, Los Angeles and attended graduate school at The George Washington University, leaving school shortly before staring work on his dissertation when his first child was born. He works in the energy industry and prior to that worked at the Bureau of Labor Statistics in the Division of Price Index and Number Research. He joined the staff at OTB in November 2004.


  1. spencer says:

    There is obviously a cost to children of having their mother work.

    The study does not directly address this point, but that may be the results we are seeing and the fact that it is a government subsidy may be irrelevant.

    The NBER summary does not provide enough information to address this point.

    It is just as easy to make the argument that this is a subsidy to business that induces women to enter the labor force at a lower wage.

    Maybe women’s lib was just a capitalist scheme to increase the supply of low priced high quality labor. I know, this sounds stupid, but there is an element of truth in it.

    One always tends to find evidence to support ones biases in such studies, but I have always believed that the children are paying a high cost for women lib that is not factored into the debate.

  2. A good test on spencer’s theory would be to compare the pre-subsidy institutionalized child care vs informal (friend/family) child care vs the stay at home mom child care numbers. In theory, I would expect the family/friend of the family caring for the child to be in the middle. They have an investment in the child more than the institutionalized child care (genetic or social) but not as much as the mother.

    Of course, all of this is averages. Really good childcare is expensive, whether this is forgone opportunity cost for stay at home mom or top rate institutionalized child care.

  3. Patrick McGuire says:

    Being a parent of a 5-yr. old who does go to daycare/preschool (on my own dime, mind you), I believe that the problems arise from parents relying on the daycare to be a substitute parent, totally relieving them of the responsibility, rather than a supplement to their own efforts to raise their children.

  4. Just Me says:

    I figure there is some combination at work-I do think Patrick makes a good point though-how a parent views the childcare may have a lot to do with how a child develops.

    There are a lot of parents who seem to think it is the jobs of public schools to teach their kids things that are non academic in nature, I wonder if this attitude shifts downward as childcare is provided to the preschool crowd.

  5. Herb says:

    But, don’t ya know, “It takes a Village to Raise a Child”.

    Quote taken from one who don’t know meaning of “raising a child” or the first clue on how to do it.