Investing in Mothers? The Long-Run Impact of a Universal Child Care Program on Maternal Work and Income

We provide new estimates of the effects of universal child care on the long-term labor outcomes of mothers, documenting the life-cycle impact of Quebec’s universal, subsidized child care program on maternal labor supply, earnings, social program benefit receipt and tax remittances. We find an enduring positive impact on mothers’ employment long after children have aged out of the preschool years. There is also a long-run impact on earnings which grows to be twice as large as the participation effect. This arises because of growth in the intensity of labor force participation and a rise in hourly wages over time, suggesting that initial investments in work have multiplier effects later in women’s careers. There is clear evidence of occupational upgrading but most of the growth is within occupation, including the impact of more labor market experience in the years after children are out of child care. We show that, as a result, tax remittances grow over the lifecycle, and social assistance and employment insurance receipts fall. Our estimate of the fiscal balance of these effects reveals that the net present value of the flow of fiscal benefits may recapture between 75 and 117 percent of the upfront costs of the program.