Is Universal Child Care Leveling the Playing Field? Evidence from Non-Linear Difference-in-Differences

47 Pages Posted: 29 Jun 2010

See all articles by Tarjei Havnes

Tarjei Havnes

University of Oslo - Department of Economics

Magne Mogstad

University of Chicago


Advocates of a universal child care system offer a two-fold argument: Child care facilitates children's long-run development, and levels the playing field by benefiting in particular disadvantaged children. Therefore, a critical element in evaluating universal child care systems is to measure the impact on child development in a way that allows the effects to vary systematically over the outcome distribution. Using non-linear DD methods, we investigate how the introduction of large-scale, publicly subsidized child care in Norway affected the earnings distribution of exposed children as adults. We find that mean impacts miss a lot: While child care had a small and insignificant mean impact, effects were positive over the bulk of the earnings distribution, and sizable below the median. This is an important observation since previous empirical studies of universal child care have focused on mean impacts. We further demonstrate that the essential features of our empirical findings could not have been revealed using mean impact analysis on typically defined subgroups. This is because the intragroup variation in the child care effects is relatively large compared to the intergroup variation in mean impacts.

Keywords: non-linear difference-in-differences, child development, universal child care, heterogeneity, distributional effects

JEL Classification: J13, H40, I28, D31

Suggested Citation

Havnes, Tarjei and Mogstad, Magne, Is Universal Child Care Leveling the Playing Field? Evidence from Non-Linear Difference-in-Differences. IZA Discussion Paper No. 4978, Available at SSRN: or

Tarjei Havnes (Contact Author)

University of Oslo - Department of Economics ( email )

P.O. Box 1095 Blindern
N-0317 Oslo

Magne Mogstad

University of Chicago ( email )

1101 East 58th Street
Chicago, IL 60637
United States

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