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

Sébastien Montpetit, Luisa Carrer and Pierre-Loup Beauregard

CHILD Working Papers Series from Centre for Household, Income, Labour and Demographic Economics (CHILD) - CCA

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.

Keywords: universal childcare; daycare coverage; social welfare; sufficient statistics; non-marginal policy (search for similar items in EconPapers)
Pages: 89 pages
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:cca:wchild:128

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