Use of government business liquidity support by child care businesses in Canada during the COVID-19 pandemic

Because of the nature of child care services, the COVID-19 pandemic, as a specific health and economic shock, has affected the child care industry differently than others. To alleviate the impacts of the pandemic on businesses, the government of Canada launched various liquidity support programs. These programs were designed to help affected businesses by partially covering their main expenses, such as wages, rents and property expenses. The paper examines the use of four emergency government support programs—the Canada Emergency Wage Subsidy (CEWS), the Canada Emergency Commercial Rent Assistance (CECRA), the Canada Emergency Rent Subsidy (CERS) and the Canada Emergency Business Account (CEBA)—by the child care businesses that qualified for them. The study first estimates the businesses’ likelihood of receiving COVID-19 support. It then examines the total dollar value of the support they received. After controlling for business characteristics and the bias introduced by sample selection and selection into the support programs, the study finds that for-profit child care businesses were more likely to receive the CEBA, the CECRA or the CERS, and the CEWS than those that are non-profit. However, non-profit businesses received higher dollar values of support than those that are for-profit. Moreover, the results show that regardless of the program, child care businesses in Ontario and Alberta were most likely to be program recipients and received the highest dollar support values compared with child care businesses in other provinces and territories. In comparison with the rest of the economy, the study finds that child care businesses were more likely to be CEBA and CECRA or CERS recipients and less likely to be CEWS recipients. Finally, the study finds that on average child care businesses received higher dollar values of support, about 10% more, than the rest of the economy. Note that the analyses in this study rely only on a sample of child care businesses with active Business Numbers that were eligible for the support programs. Those businesses accounted for 16% of all child care businesses in 2019 but generated more than 72% of the total revenue in the industry. Hence, the inferences and conclusion may not necessarily be generalizable to the entire child care industry.