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

Sebastien Montpetit, Luisa Carrer and Pierre-Loup Beauregard
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Sebastien Montpetit: Department of Economics, University of Warwick
Luisa Carrer: Department of Economics, ESCP Business School

The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics

Abstract: We assess the welfare impact of the introduction of universal daycare services in Quebec in 1997. Unlike the standard suffcient-statistic metric, which assumes marginal changes in fiscal policy, our approach accounts for the non-marginal nature of the program and quantifies nonpecuniary 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 suffcient-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; suffcient statistics; non-marginal policy JEL Codes: D61; H43; J13; J22 (search for similar items in EconPapers)
Date: 2025
New Economics Papers: this item is included in nep-pbe
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Related works:
Working Paper: A Welfare Analysis of Universal Childcare: Lessons From a Canadian Reform (2025)
Working Paper: A welfare analysis of universal childcare: Lessons from a Canadian reform (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:wrk:warwec:1584

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