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A Welfare Analysis of Universal Childcare: Lessons From a Canadian Reform

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  • Sébastien Montpetit
  • Luisa Carrer
  • Pierre-Loup Beauregard

Abstract

We assess the welfare impact of the introduction of universal daycare services in Qu Ì ebec in 1997. Unlike the standard sufficient-statistic metric, which assumes marginal changes in fiscal policy, our approach accounts for the non-marginal nature of the program and quantifies non- pecuniary benefits. Through a structural model of childcare demand, we estimate substantial welfare gains from the policy, yielding a Marginal Value of Public Funds (MVPF) above 3.5. Using the sufficient-statistic approach underestimates welfare gains by half. Counterfactual simulations and a difference-in-differences analysis suggest that increasing availability, rather than solely improving affordability, is crucial for the effective design of universal programs.

Suggested Citation

  • Sébastien Montpetit & Luisa Carrer & Pierre-Loup Beauregard, 2025. "A Welfare Analysis of Universal Childcare: Lessons From a Canadian Reform," CHILD Working Papers Series 128 JEL Classification: D, Centre for Household, Income, Labour and Demographic Economics (CHILD) - CCA.
    • Handle: RePEc:cca:wchild:128
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    File URL: https://www.child.carloalberto.org/images/documenti/child128_2025.pdf
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