Category: How Child Care Affects Children and Parents

Child care can affect children’s development and parent activities. What does evidence say?

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A Fact-Based Response to Cardus’ Odd Assertions

Since its beginning, Canada’s plan to build a system of child early learning and child care – the “$10 a day plan” –  has been panned by a handful of players. These include spokespeople for some political parties, some child care centre owners, right-wing “pundits”, and social and economic conservatives, all with their own agendas. Relying on misrepresentation of research literature, misinterpretation of public opinion polls and Statistics Canada surveys, the common agenda is to paint the $10 a day plan as a “failure” and “disaster” rather than the first largely successful phase of a Canada-wide project to build a workable child care system for all families and children over time.  (Really, it is the second phase because back in 1997, Quebec began to build a largely successful and largely universal low fee child care system of their own).

This blog comments on a policy brief published  by Cardus in November 2024.  Cardus advertises itself as a non-partisan Christian think-tank; it takes a socially conservative approach and promotes ways of thinking that pre-date the Royal Commission on the Status of Women that reported in 1970.

Cardus would have you believe that very few Canadian children and families benefit from low fee licensed child care.  Cardus’ staff members Mitchell and Mrozek have written that: “…most Canadian families receive no benefit from the billions spent – only 29% of children aged 0-12 had access to a licensed space in 2021.”  (November 2024).  It’s a pity that Mitchell and Mrozak inappropriately use data on children 0-12 years to reach this conclusion.  Most of these children (the 6-12 year olds) are not even covered by the new funding programs to make child care universally affordable for families.  Cardus should instead have informed themselves with the latest Statistics Canada data (the parent survey in 2023 that looks at children 0-5 years of age).  It’s called the Canadian Survey on Early Learning and Child Care.  Or, Cardus could have read the report entitled Giving Parents Money Doesn’t Solve Child Care Problems published by the Prosperity Project in September 2024.  It provided much of the same data we include in this blog.

Many families already benefit from low fee child care

If Cardus had consulted the appropriate data, they would find out that the truth is somewhat different from their biased conclusion.  The latest data are from 2023, two years after the beginning of the $10 a day program and about 25 years since Quebec began phasing in universal child care.  There are about 2.2 million children 0-5 years of age in Canada and close to a million of them (938,000 children or 42% of all children) are already using licensed child care. 

Families prefer to use licensed child care

In fact, 75% of the children 0-5 years of age who use any kind of non-parental child care in Canada now use licensed child care.  About 1.25 million children 0-5 regularly use some form of non-parental child care and 938,000 of them are using licensed child care.

Licensed child care provides strong support of parental employment

A major reason why governments in Canada are spending billions of dollars to provide low fee child care is to support parental employment.  And this support of parental employment is happening.  According to the recent Statistics Canada parent survey, 59% of parents (mostly mothers) whose main activity is working at a paid job or business already use licensed child care for their young children.  Many others – another 115,000 who are on a waiting list – would like to use licensed child care and will happily do so when more supply becomes available.

Child age and availability of kindergarten explain patterns of use of licensed child care

The demand for licensed child care is strongly related to the child’s age.  Parents with  children less than two years are less likely to use licensed child care, so satisfying the demand for licensed care does not mean having spaces for 100% of children.

When considering child care use, it’s important to take other family or education programs into account.  For many families with very young children, parent-only care during maternity or parental leave is their choice.  For many children who are already in full-school-day kindergarten at four or five years of age, they do not need or their parents do not want supplementary child care. 

Across Canada:

  • 24% of children younger than two years of age  are in licensed child care.  In this age bracket, 62% are in parent-only care, with many of these parents on maternity or parental leave. 
  • 55% of all children in Canada who are two or  three years of age currently use licensed care. 
  • 68% of all four- and five-year-olds who are not yet in kindergarten currently use licensed care. 
  • But, when those four- and five-year-olds reach kindergarten, the use of licensed child care drops to 33%.
Percent of Canadian Children Using Licensed Child Care by Age Group and Kindergarten Attendance, 2023

From the Public User Microdata File of the Canadian Survey on Early Learning and Child Care, 2023.

Licensed Child Care and Low-Income Families

The other main claim in Cardus’ brief is that low-income families do not get much access to child care services when child care is universally funded. The implication is that low-income families would be better served by a targeted child care program.  And that universal $10 a day child care will mostly serve affluent families rather than those who have low-incomes.

There are two problems with this.  First, the use of licensed child care by low-income families is already larger than you might imagine.  In Canada outside Quebec 36% of children with employed mothers from the lowest income group use licensed care.  And in Quebec, 68% of children with employed mothers from the lowest income group are in licensed child care.

 Second, Cardus has identified the wrong culprit for the important inequities that remain.  It is market-driven child care that disadvantages low-income families.  It is universal  child care that does a better job of welcoming the participation of low-income children to licensed child care. 

We can see this by comparing access to licensed child care for different income groups where the mother is employed in provinces outside Quebec to the same data from Quebec.  Two conclusions are obvious in the charts below.  First, in Quebec, a much greater percentage of children from these low-income families are able to access licensed child care than is the case in the rest of Canada’s provinces.  Second, the gap in access between the lowest and highest income groups is much smaller in Quebec than it is in the rest of Canada.  As before, this data is from Statistics Canada’s recent parent survey. 

What’s the explanation?  When child care fees were uncontrolled (as they were in Canada outside Quebec until 2021 or 2022) many families have found licensed child care to be completely unaffordable.  Most low-income families were squeezed out.  Targeted child care subsidies were not enough to reverse this trend.  Naturally, the majority of child care users were from more affluent families.  But this was a result of the mostly unrestricted operation of the free market in child care, not the result of a massive program to lower fees. 

Percent of Children in Licensed Child Care by Income Group in Canada outside Quebec when Mother is Employed

From the Public User Microdata File of the Canadian Survey on Early Learning and Child Care, 2023.

Note: * The vast majority of parents responding to the survey were mothers

Percent of Children in Licensed Child Care by Income Group in Quebec when Mother is Employed

From the Public User Microdata File of the Canadian Survey on Early Learning and Child Care, 2023.

Note: * The vast majority of parents responding to the survey were mothers

As Cardus would know if they had looked at the federal-provincial-territorial agreements that have brought us the $10 a day child care program, improved equity in access for children from different backgrounds is a key objective of the federal program.  There are substantial federal, provincial and territorial efforts to ensure that new child care capacity is directed towards underserved populations – low income children, vulnerable children, children from diverse communities, children with special needs, and Francophone and Indigenous children.  Still, there is too little access to licensed child care for low-income families – on this we agree with Cardus.  But eliminating funding support for child care services and instead paying money to families to stay at home is the opposite of a solution to this problem.

Cardus wants to make child care unaffordable again

Cardus does not really want financial support for licensed child care at all.  Instead, Cardus wants us to return to some version of Stephen Harper’s Universal Child Care Benefit.  They estimate that if the federal spending on the $10 a day child care program was divided equally amongst families instead of going directly to day care centres to lower fees, each family would receive $3,869 per child, per year.  But, right now, families using low fee child care are receiving $5,000 – $15,000 in child care fee reductions.  With the end of direct funding of child care, child care fees would soar and nearly a million families would be much worse off than they are currently. Child care would be unaffordable once again, and mothers would be squeezed out of employment by high fees.  How is that a sensible and affordable child care policy?  No wonder 75% of Canadians think that a Conservative government, if elected, shouldn’t end the $10 a day child care program.

There Is still a lot of work to do to build a $10 a day child care program for all the families that want to use it – especially in expanding the qualified workforce and the supply of services.  But already many Canadian children and families are much better off than they were in 2021.  The priority now is to finish the job of providing affordable, accessible, quality child

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New Support for the Economic Benefits of Universal Child Care

I met Sebastien Montpetit at the Canadian Economics Association meetings in Winnipeg last year.  He is a Canadian and Quebecer who has been studying for his PhD in economics at the University of Toulouse.  And he, with co-authors, has come up with a really fascinating analysis of the impacts of Quebec’s universal child care program ushered in the late 1990s and the early 2000s. 

The paper is complex, has multiple parts, and the latest version of it is available here.  It has been selected as one of three finalists for the Canadian Labour Economics Forum prize at the upcoming Canadian Economics Association meetings in Toronto.  I’ll give you the main take-home points right away, and then delve into where the results come from.

Sebastien’s main conclusions?

  • The importance of the supply of child care services has been underrated.  Greater supply of child care – availability – is as important as improvements in affordability.  In Quebec, the regions that had the largest increases in child care supply had the biggest impacts on mother’s employment and increased child care use.  Lowering fees without increasing coverage has modest effects on the benefits to families.  The bottom line: increasing local child care supply is key to the effectiveness of child care reforms.

  • The economic benefits from improved maternal labour supply in Quebec have been well studied and Sebastien confirms them.  But, there are very substantial non-monetary benefits for mothers too.  Think of this as work-family balance, things like the reduced search time for child care, the shorter distances that have to travelled each day when child care is much more available and affordable. 

  • When all the benefits are summed, benefits total more than 3.5 dollars of benefit per dollar of net government spending – more than twice the benefit that comes from looking only at increased mothers’ earnings.
  • Earnings gains for mothers impacted by Quebec’s child care reforms are concentrated in the fifth through the eighth decile of income. In other words, many of the fiscal benefits to governments of a universal child care reform come from mothers who can earn moderate to reasonably high incomes.  These are mothers who will not be reached by a targeted approach to child care spending.  A universal approach may therefore be more fiscally responsible than targeted child care initiatives.
  • Michael Baker, Kevin Milligan and Johnathan Gruber became renowned for their paper concluding that there were a range of negative effects on children who lived in Quebec during the early years of Quebec’s child care reforms (and may have participated in child care).  Sebastien looks at data on those children many years later and assesses whether their educational development was negatively impacted.  He finds no evidence of this; educational attainment of students in Quebec and the rest of Canada is very much the same.
  • Michael Baker, Kevin Milligan and Johnathan Gruber gained some additional notoriety for a follow-on paper that found increased juvenile criminality amongst Quebec children who were exposed to Quebec’s child care reforms.  Sebastien Montpetit looks at the evidence on juvenile crimes and finds that most of the increased juvenile crime that may have occurred was very minor and that the societal cost is relatively small.

The main data source for all of his analyses is the National Longitudinal Study on Children and Youth.  He also uses data from the Canadian Censuses of 2016 and 2021. 

There are four types of analysis that compose this complex paper.  First, with new data on regional child care coverage rates, Sebastien uses a difference-in-differences approach to compare mothers in Quebec to those in the rest of Canada.  He finds that in regions where child care supply increased the most, employment and child care use increased much more when other factors are controlled.

In particular, in regions where child care supply expanded more, the child care reforms boosted mothers’ labour force participation by 40% more than in other regions

Further, Sebastien finds that mothers with low levels of education also respond more in these regions with high levels of expansion.

Results suggest that for high educated mothers with a post-secondary qualification, the main incentive to take up employment was the fee reduction.  For mothers without a post-secondary qualification, access to a space was key. 

Sebastien uses a non-linear difference-in-differences model to estimate earnings gains across mothers’ income distribution.  Mothers’ earnings gains from the child care reforms are found to amount to $1.42 per $1.00 of net government spending.

Baker, Gruber and Milligan found that eligible children in two-parent families experienced worse developmental outcomes and lower consistency in parenting.  Other researchers found substantial heterogeneity in these results.  Haeck et al (2015,2018, 2022) found that most negative impacts on children and parental behaviour fade away over time.

In order to look at children’s educational attainment later in life, Sebastien employs a triple-difference model which compares education levels of same age individuals born before or after the reforms in Quebec to similar individuals in the rest of Canada.

The paper concludes: “We find no evidence of negative effects on educational attainment of eligible children in the long-run. This pattern is true for each educational level, namely for university, high school, and college completion….

 As a result: “…the negative impacts on child behavior documented by Baker et al. (2008, 2019) do not translate into depressed economic outcomes later in life.” (p. 2)  “…this evidence thus suggests the absence of negative fiscal impacts stemming from eligible children’s economic outcomes in the long run.” (pp. 2-3).[1]

Triple-difference estimator compares same-age individuals who vary in eligibility status based on the census year and their province of birth.   He finds no evidence of negative effects on educational attainment of eligible children in the long run.  This pattern is true for every educational level. 

Sebastien Montpetit takes Baker and colleagues’ estimates of increases in youth criminal activity (2019) and estimates what the victimization costs and productivity losses would be.  Using recent estimates of the costs of crime, he finds that these social costs are small.

Difference-in-differences estimates seek to use good control groups to help judge the effectiveness of some policy change.  So, for instance, children 0-4 years of age in the rest of Canada where there was no major child care reform, might be considered to be a good control group to compare to what happened with children 0-4 or the mothers of those children in Quebec.  Why is it called difference-in-differences?  Because this statistical technique does not compare the level of a variable (like mothers’ labour force participation) in Quebec to the same level in Canada.  Instead, it compares the change in mothers’ labour force participation (called a difference) in Quebec to the change over a few years (another difference) in the mothers’ labour force participation in the rest of Canada.  This analysis is done in a regression framework including other variables, so that we can see the impact of those variables on the policy result.

Montpetit then estimates a structural model of maternal labour supply and child care choice in order to make inferences about the size of the non-monetary benefits that mothers receive from Quebec’s universal child care system.  The non-monetary benefits are found to be substantial.  Using the model to do additional simulations, Sebastien concludes that these non-monetary benefits are particularly closely related to the availability of child care services in the local area.  He concludes that universal child care policies for children 0-4 can generate substantial social returns.  And he concludes that increased availability of child care is particularly important to these returns.

Sebastien notes that the quality of Quebec child care in this period was very uneven with CPEs having higher quality and other child care centres having lower quality.   Sebastien is not able to include quality measures in his analyses. 

Altogether a very interesting, carefully crafted and timely paper.  Congratulations Sebastien and co-authors!

[1] Montpetit, S., Beauregard, P., & Carrer, L. (2024). A Welfare Analysis of Universal Childcare: Lessons From a Canadian Reformhttps://drive.google.com/file/d/1dDWvj2e08YodXAWd5zdmBKP3j-kxt1Uj/view

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$10 a Day Child Care Will Dramatically Reduce Employment Barriers for Parents

A major new study (https://childcarepolicy.net/wp-content/uploads/2021/12/Ten_a_day-paper-web.pdf ) addresses the question of whether the $10 a day program will truly improve child care affordability and reduce barriers to employment for families.  It was written by economists Gordon Cleveland and Michael Krashinsky from the Department of Management at University of Toronto Scarborough.

Their study focuses on the situation facing couple families with one infant child and one preschooler in each of the three provinces at different possible levels of income.  The authors’ main conclusion is that the $10 a day program can and should dramatically change child care affordability and make employment a worthwhile option for many caregiving parents.  However, even if provinces and territories adopt a flat fee of $10 a day, they will need to have some kind of sliding scale to ensure that low-income families are not disadvantaged.

On the basis of this work, Dr. Gordon Cleveland says

  • “Ontario should sign a funding deal soon with the federal government; if they don’t reach an agreement by early next year, Ontario will lose about $1 Billion in child care funding.”  
  • “Our work shows that child care costs are a very large barrier to employment for many two-parent families, and that $10 a day child care will dramatically reduce those barriers.” 
  • “To reach an agreement, Ontario needs to develop a child care Action Plan.  That plan needs to include support for dramatic expansion of non-profit child care – at least 150,000 spaces over 5 years.   It needs a plan to phase-in more affordable child care, so that supply and demand increase together.  And it needs plans to pay early childhood educators more so we can recruit more trained staff now.”

Finance Minister Chrystia Freeland’s April Budget is spending $30 Billion over 5 years to make child care affordable enough to eliminate this major barrier to the employment of mothers of young children across Canada. As of December 2021, nine provinces and territories have signed on to the $10 a day early learning and child care program, with Ontario being a notable holdout.  This timely study seeks to determine whether the $10 a day policy gamble is likely to work, and what kind of funding reforms will make the effects more equitable.

Specific conclusions of the study include:

  • Under current policies, if a couple family with two children cannot access subsidies in Ontario (and most cannot) licensed child care at any income level is remarkably unaffordable. 
  • If Ontario offered licensed child care at a flat fee of $10 a day per child along with the existing tax credit, a couple family with two children would pay less than 15% of the caregiving parent’s income contribution in child care fees, no matter what their income level.  The child care cost barrier to employment would be dramatically reduced.
  • Alberta’s new funding policies agreed to with the federal government will improve affordability, particularly for families at higher levels of income.  Alberta plans to offer substantial operating grants to child care centres and homes to allow them to lower parent fees.  And Alberta is extending its subsidy system to cover families with partial subsidies out to $180,000 of family income.
  • The combination of grants and subsidies will still leave Calgary couple families with two children giving up more than 30% of net extra employment income if the caregiving parent earns less than $44,000 (family income of $110,000).   In other words, child care will be unaffordable for these families even when Alberta’s new child care policies are fully implemented. 
  • Edmonton families will be better off than Calgary families because median fees start off at a lower level before the new funding programs.  Only families where the caregiving parent earns less than about $18,000 (family income of $45,000) will find child care unaffordable (30% or more of the net income contribution of the second earner).
  • Manitoba pioneered flat fees for child care, and operational funding to lower fees.  However, its positive reputation is not supported by measures of current child care affordability. 
  • A flat fee of $10 a day per child (with no subsidy system) would improve affordability for nearly all couple families with two children in Manitoba except when the caregiving parent’s income is $14,000 or below.    However, a flat fee will mean that affordability is always worse for families the lower their income. 
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Does child care in Canada improve social equality?

Recently, Prof. Bob Brym invited me to join others in exploring the issue of equality in contemporary Canadian society.  The occasion was the inaugural S.D. Clark Symposium on the future of Canadian society.  My topic was to assess how good a job child care is doing in Canada in improving different types of equity – gender, child and family.  I’ve attached my (rather lengthy) notes for the talk.  You should look for the volume based on this Symposium to be published soon by Oxford University Press. It will contain chapters from each of the authors, including my own.