A welfare analysis of universal childcare: Lessons from a Canadian reform

Sébastien Montpetit, Pierre-Loup Beaureard and Luisa Carrer
Authors registered in the RePEc Author Service: Pierre-Loup Beauregard

No 73, CLEF Working Paper Series from Canadian Labour Economics Forum (CLEF), University of Waterloo

Abstract: Leveraging the introduction of universal low-fee daycare in Québec in 1997, we assess the welfare effect of universal childcare provision. First, using novel data on local daycare coverage and a difference-in-differences design, we show that positive impacts on maternal labor supply and childcare use are greater in areas with larger daycare expansion, suggesting that childcare availability, not just affordability, drives these responses. We then estimate the policy's Marginal Value of Public Funds (MVPF), defined as the ratio of beneficiaries' utility gains to net governmental costs. Unlike the standard sufficient-statistics metric, which assumes a marginal change in fiscal policy, we quantify the beneficiaries' utility gains through a model of maternal labor supply and childcare choices. This allows us to relax the common marginal-policy assumption and to incorporate non-pecuniary benefits for parents. Our results indicate substantial welfare gains from universal policies, with approximately $3.5 of benefits per dollar of net government spending - over twice the amount captured by the sufficient-statistics metric. Counterfactual simulations suggest that allocating more resources to increasing availability, rather than improving affordability, could yield even larger social returns.

Keywords: universal childcare; daycare coverage; social welfare; sufficient statistics (search for similar items in EconPapers)
JEL-codes: H43 J13 J22 (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-dem, nep-lab and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.econstor.eu/bitstream/10419/300866/1/1898220158.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:zbw:clefwp:300866

Access Statistics for this paper

More papers in CLEF Working Paper Series from Canadian Labour Economics Forum (CLEF), University of Waterloo
Bibliographic data for series maintained by ZBW - Leibniz Information Centre for Economics ().