Universal Childcare, Maternal Labor Supply, and Family Well-Being

62 Pages Posted: 2 Mar 2006

See all articles by Michael Baker

Michael Baker

University of Toronto - Department of Economics; National Bureau of Economic Research (NBER)

Jonathan Gruber

Massachusetts Institute of Technology (MIT) - Department of Economics; National Bureau of Economic Research (NBER)

Kevin S. Milligan

University of British Columbia (UBC) - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: December 2005

Abstract

The growing labor force participation of women with small children in both the U.S. and Canada has led to calls for increased public financing for childcare. The optimality of public financing depends on a host of factors, such as the %u201Ccrowd-out%u201D of existing childcare arrangements, the impact on female labor supply, and the effects on child well-being. The introduction of universal, highly-subsidized childcare in Quebec in the late 1990s provides an opportunity to address these issues. We carefully analyze the impacts of Quebec%u2019s %u201C$5 per day childcare%u201D program on childcare utilization, labor supply, and child (and parent) outcomes in two parent families. We find strong evidence of a shift into new childcare use, although approximately one third of the newly reported use appears to come from women who previously worked and had informal arrangements. The labor supply impact is highly significant, and our measured elasticity of 0.236 is slightly smaller than previous credible estimates. Finally, we uncover striking evidence that children are worse off in a variety of behavioral and health dimensions, ranging from aggression to motor-social skills to illness. Our analysis also suggests that the new childcare program led to more hostile, less consistent parenting, worse parental health, and lower-quality parental relationships.

Suggested Citation

Baker, Michael and Gruber, Jonathan and Milligan, Kevin S., Universal Childcare, Maternal Labor Supply, and Family Well-Being (December 2005). NBER Working Paper No. w11832. Available at SSRN: https://ssrn.com/abstract=875708

Michael Baker (Contact Author)

University of Toronto - Department of Economics ( email )

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Jonathan Gruber

Massachusetts Institute of Technology (MIT) - Department of Economics ( email )

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Kevin S. Milligan

University of British Columbia (UBC) - Department of Economics ( email )

997-1873 East Mall
Vancouver, BC V6T 1Z1
Canada

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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