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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.

Suggested Citation

  • Pierre Lefebvre & Philip Merrigan & Francis Roy-Desrosiers, 2011. "Québec's Childcare Universal Low Fees Policy 10 Years After: Effects, Costs and Benefits," Cahiers de recherche 1101, CIRPEE.
  • Handle: RePEc:lvl:lacicr:1101
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    File URL: http://www.cirpee.org/fileadmin/documents/Cahiers_2011/CIRPEE11-01.pdf
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    References listed on IDEAS

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    1. Michael Baker & Jonathan Gruber & Kevin Milligan, 2008. "Universal Child Care, Maternal Labor Supply, and Family Well-Being," Journal of Political Economy, University of Chicago Press, vol. 116(4), pages 709-745, August.
    2. repec:spr:portec:v:1:y:2002:i:2:d:10.1007_s10258-002-0010-3 is not listed on IDEAS
    3. Richard Blundell & Monica Costa Dias, 2009. "Alternative Approaches to Evaluation in Empirical Microeconomics," Journal of Human Resources, University of Wisconsin Press, vol. 44(3).
    4. Pierre Merrigan & Philip Lefebvre, 2002. "The Effect of Childcare and Early Education Arrangements on Developmental Outcomes of Young Children," Canadian Public Policy, University of Toronto Press, vol. 28(2), pages 159-185, June.
    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. 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.
    7. 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).
    8. 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, July.
    9. Jean-Yves Duclos, 2006. "Equity and Equality," Cahiers de recherche 0629, CIRPEE.
    10. 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.
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    Cited by:

    1. repec:ucp:jlabec:doi:10.1086/690652 is not listed on IDEAS
    2. 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.
    3. Dionne, Georges & Santugini, Marc, 2014. "Entry, imperfect competition, and futures market for the input," International Journal of Industrial Organization, Elsevier, pages 70-83.
    4. Abel Brodeur & Marie Connolly, 2012. "Do Higher Childcare Subsidies Improve Parental Well-being? Evidence from Québec's Family Policies," Cahiers de recherche 1223, CIRPEE.
    5. 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.
    6. Marigen Narea, 2014. "Does early centre-based care have an impact on child cognitive and socio-emotional development? Evidence from Chile," CASE Papers case183, Centre for Analysis of Social Exclusion, LSE.
    7. Olivier Thévenon & Angela Luci, 2012. "Reconciling Work, Family and Child Outcomes: What Implications for Family Support Policies?," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), pages 855-882.
    8. Brodeur, Abel & Connolly, Marie, 2013. "Do higher child care subsidies improve parental well-being? Evidence from Quebec's family policies," Journal of Economic Behavior & Organization, Elsevier, vol. 93(C), pages 1-16.
    9. Michael J. Kottelenberg & Steven F. Lehrer, 2014. "Do the Perils of Universal Childcare Depend on the Child’s Age?," CESifo Economic Studies, CESifo, pages 338-365.
    10. repec:hal:psewpa:halshs-00699671 is not listed on IDEAS
    11. repec:cep:sticas:/183 is not listed on IDEAS
    12. Michael J. Kottelenberg & Steven F. Lehrer, 2017. "Targeted or Universal Coverage? Assessing Heterogeneity in the Effects of Universal Child Care," Journal of Labor Economics, University of Chicago Press, vol. 35(3), pages 609-653.
    13. Haeck, Catherine & Lefebvre, Pierre & Merrigan, Philip, 2015. "Canadian evidence on ten years of universal preschool policies: The good and the bad," Labour Economics, Elsevier, vol. 36(C), pages 137-157.
    14. Michael J. Kottelenberg & Steven F. Lehrer, 2017. "Does Quebec's Subsidized Child Care Policy Give Boys and Girls an Equal Start?," NBER Working Papers 23259, National Bureau of Economic Research, Inc.
    15. 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.

    More about this item

    Keywords

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

    JEL classification:

    • H42 - Public Economics - - Publicly Provided Goods - - - Publicly Provided Private Goods
    • J21 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Labor Force and Employment, Size, and Structure
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply

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