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Québec's Childcare Universal Low Fees Policy 10 Years After: Effects, Costs and Benefits

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  • Pierre Lefebvre
  • Philip Merrigan
  • Francis Roy-Desrosiers

Abstract

More than ten years ago the province of Québec implemented a universal early childhood education and care policy. This paper examines if the two objectives pursued, to increase mothers’ participation in the labour market (balance the needs of workplace and home) and to enhance child development and equality of opportunity for children, were reasonable meet. A non-experimental evaluation framework based on multiple pre- and post-treatment periods is used to estimate the policy effects. First, year after year the number of children and their weekly of hours in childcare have increased. More preschool children are in non-parental childcare at a younger age and the intensity of childcare has increased over the years. Second, the policy has significantly increased the labour force participation and annual weeks worked for mothers with at least a child aged 1 to 4 years compared to mothers in the same situation in the Rest of Canada. Third, the evidence presented show that the policy has not enhanced school readiness or child early literacy skills in general, with negative significant effects on the PPVT scores of children aged 5 and possibly negative for children of age 4. Simulations show the bounds of the public benefits in terms of additional net taxes (income taxes less refundable credits and transfers based on household’s “net” income). Unless one suppose that mothers in the upper part of the earnings distribution are those who returned early to the labour market after giving birth or a maternity leave, and who have worked more weeks, the effect on governments revenues are modest. The main beneficiary of the larger tax base of a higher labour supply of mothers with young children is the federal government which do not support the significant public funding of the program. The policy has some drawbacks in terms of social efficiency and equity. The structure of the program with its very low $7/day fee before taxes creates strong incentives for families to use long hours of daycare for children at a very young age, which may not be the best mechanism for children development. The high transfers in-kind (1.9 billion in 2009) to families using subsidized childcare raise the question of their horizontal and vertical equity. The paper concludes on three modifications to the program that could correct some of its weaknesses.

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Bibliographic Info

Paper provided by CIRPEE in its series Cahiers de recherche with number 1101.

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Date of creation: 2011
Date of revision:
Handle: RePEc:lvl:lacicr:1101

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Web page: http://www.cirpee.org/
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Related research

Keywords: Childcare policy; mother’s labour supply; preschool children and school readiness; treatment effects; natural experiment;

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References

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  1. Francesconi, Marco & van der Klaauw, Wilbert, 2004. "The Consequences of ‘In-Work’ Benefit Reform in Britain: New Evidence from Panel Data," IZA Discussion Papers 1248, Institute for the Study of Labor (IZA).
  2. Blundell, Richard & Costa Dias, Monica, 2008. "Alternative Approaches to Evaluation in Empirical Microeconomics," IZA Discussion Papers 3800, Institute for the Study of Labor (IZA).
  3. Pierre Lefebvre & Philip Merrigan, 2008. "Child-Care Policy and the Labor Supply of Mothers with Young Children: A Natural Experiment from Canada," Journal of Labor Economics, University of Chicago Press, vol. 26(3), pages 519-548, 07.
  4. Lefebvre, Pierre & Merrigan, Philip & Verstraete, Matthieu, 2009. "Dynamic labour supply effects of childcare subsidies: Evidence from a Canadian natural experiment on low-fee universal child care," Labour Economics, Elsevier, vol. 16(5), pages 490-502, October.
  5. DeCicca, Philip, 2007. "Does full-day kindergarten matter? Evidence from the first two years of schooling," Economics of Education Review, Elsevier, vol. 26(1), pages 67-82, February.
  6. Michael Baker & Jonathan Gruber & Kevin Milligan, 2006. "Universal Childcare, Maternal Labor Supply, and Family Well-Being," Working Papers id:547, eSocialSciences.
  7. Pierre Lefebvre & Philip Merrigan & Matthieu Verstraete, 2008. "Childcare Policy and Cognitive Outcomes of Children: Results from a Large Scale Quasi-Experiment on Universal Childcare in Canada," Cahiers de recherche 0823, CIRPEE.
  8. Pierre Lefebvre & Philip Merrigan, 2000. "The Effect of Childcare and Early Education Arrangements on Developmental Outcomes of Young Children," Cahiers de recherche CREFE / CREFE Working Papers 119, CREFE, Université du Québec à Montréal.
  9. Jean-Yves Duclos, 2006. "Equity and Equality," Cahiers de recherche 0629, CIRPEE.
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Citations

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Cited by:
  1. Brodeur, Abel & Connolly, Marie, 2012. "Do Higher Childcare Subsidies Improve Parental Well-being? Evidence from Québec's Family Policies," IZA Discussion Papers 6804, Institute for the Study of Labor (IZA).
  2. Nicholas-James Clavet & Jean-Yves Duclos, 2012. "Le financement des services de garde des enfants: effets sur le travail, le revenu des familles, et les finances publiques," Cahiers de recherche 1216, CIRPEE.
  3. Catherine Haeck & Pierre Lefebvre & Philip Merrigan, 2013. "Canadian Evidence on Ten Years of Universal Preschool Policies: the Good and the Bad," Cahiers de recherche 1334, CIRPEE.
  4. Pierre Fortin, 2011. "Income Support in the Canadian Federation: International and Interprovincial Comparisons and Future Directions," New Directions for Intelligent Government in Canada: Papers in Honour of Ian Stewart, in: Fred Gorbet & Andrew Sharpe (ed.), New Directions for Intelligent Government in Canada: Papers in Honour of Ian Stewart, pages 211-226 Centre for the Study of Living Standards.
  5. Abel Brodeur & Marie Connolly, 2012. "Do Higher Childcare Subsidies Improve Parental Well-being? Evidence from Québec's Family Policies," Working Papers halshs-00699671, HAL.

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