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.
