Investing in Quality Early Childcare Is Good for Vulnerable Kids—and Good Economics, Too


Early childcare can be a major contributor to eliminating inequality of opportunity and even lay the foundations for a more productive workforce in the future.

 

Photo by Airman 1st Class Hunter Brady [Public domain], via Wikimedia Commons

For several decades, in the United States, many European countries, and elsewhere, there has been a significant increase in the proportion of mothers going to work. In turn, this trend has led to an increase in the provision of childcare, both private and state, to bridge the gap between children’s birth and the age when they start school.

 

Understandably, much attention has focused on how best to provide and fund this childcare. Perhaps less attention, though, has been given to the impact of childcare on child development, particularly for the very youngest children. Yet, just as childcare provision has an immediate impact on economies by enabling mothers to become productive participants in the workforce, our research shows that the impact of early childcare (ECC) has profound implications for the workforce of the future.

 

As the proportion of mothers with dependent children in work has increased in recent decades, policymakers have made efforts, with varying degrees of success, to increase the availability of early childcare, either by direct state intervention, market-driven solutions, or a mix of both. Consequently, in many societies and for many families the responsibility for looking after very young children during the day has passed from parents to third-party care providers.

 

Some believe ECC can only be a poor substitute for the care provided by parents at home. Others argue that, for certain children at least, ECC may offer real benefits over parental care provided at home.

This shift in the approach to childcare provision has prompted a hotly contested debate about the merits of ECC and how it affects child development. Some believe ECC can only be a poor substitute for the care provided by parents at home. Others argue that, for certain children at least, ECC may offer real benefits over parental care provided at home.

 

In theory, this argument could be easily settled with robust research comparing the performance of children brought up at home with those that use childcare. In practice, of course, the problem is far more complex, especially because of the variety of factors that may influence child development outcomes. The impact of ECC is likely to vary for children from different backgrounds, an issue that has not been given sufficient attention and is hard to tackle.

 

Examining the Impact of Early Childcare

 

Fortunately for our research purposes, the circumstances surrounding ECC provision in West Germany (and by ECC we mean childcare offered to children under the age of three), coupled with unique data and specialized econometrics techniques, allowed us to gauge the comparative impact of ECC. We were able to separate out the impact on children depending on characteristics such as gender, migrant status, and the educational attainment of parents, as well as the attitude of parents toward sending their children to ECC.

 

In doing so we have uncovered some compelling insights into the impact of ECC on child development. And, although our focus is on the care of very young children there is strong evidence from existing literature to suggest that, even at this young age, any positive impact of ECC may stretch well into later childhood years and adulthood. (See, e.g., the extensive research by Heckman and coauthors.)

 

In West Germany the provision of ECC up to three years of age is delivered by state-run care centers and heavily subsidized by the government. There is a clear educational mission, with a focus on developing children’s analytical, language, and motor skills, governed by strict guidelines. Centers are tightly regulated with regard to hours, group size, the staff-child ratio, and staff qualifications. The regulation and quality standardization means that the quality of care provided is less likely to account for variation in child development performance.

 

Legal entitlement to a place for all children aged one and over was only introduced in 2013. Prior to this demand for ECC places far exceeded supply, although the number of places available gradually increased following a federal government program of expansion initiated in 2005. We studied aspects of childhood development performance for six cohorts of children attending care centers in the years 2003 to 2011 inclusive, a period of “modest” expansion of ECC attendance from 7 to 27 percent. In addition, we estimated findings for a projected simulated alternative of “progressive” expansion from the current attendance of 27 percent of children to 50 percent, in order to assess the implications of different policy approaches to ECC expansion.

 

Compulsory medical screening at age six, when pediatricians assess children’s development with regard to language, motor, and socioemotional skills, provides a reliable source of childhood development performance data. All three dimensions are predictors of social and economic success later in life, including educational achievement and labor market performance. The socioemotional component is particularly interesting as it looks at issues such as behavioral problems, emotional instability, hyperactivity, and peer relationships, and it is not part of the educational mission for care centers, unlike language and motor skills.

 

The Benefits of ECC

 

Our findings show that, as far as motor skills are concerned, all the children, regardless of the different characteristics considered, benefitted from attending the ECC centers. These are the findings under the moderate reform conditions, i.e., when attendance increased from 7 to 27 percent, which covers the average expansion rate during the period from 2009 to 2014 and the cohorts of children we studied.

 

For language skills the impact of ECC under moderate reform conditions, while more modest, are still positive with immigrant children gaining the most.

 

The socioemotional component possibly provides the most interesting results. The socioemotional advantages from attending ECC under moderate reform conditions prove minimal for all the children, albeit slightly less so for boys.  However, when we look at progressive expansion, then this changes. Boys, children with less educated parents, and immigrants all benefit significantly from ECC with respect to socioemotional skills.

 

With modest reform conditions, and ECC places allocated on a first-come-first-served basis, the children that attend ECC are inevitably those whose parents are most determined to obtain a place for their child and that place the greatest value on ECC. However, as the availability of places increases under progressive reform conditions, more children are able to attend regardless of the value their parents place on ECC.

 

Parents less likely to send their child to a care center, but who do so when progressive expansion makes getting a place much easier, may not provide those socioemotional skills-building experiences at home, and so their children benefit hugely by attending care centers. This is particularly true for boys, immigrants, and children from less-educated families.

It is possible that the parents who are more likely to send their child to a care center, even when places were relatively scarce, have a better understanding of what it takes to foster socioemotional development—such as meeting other families regularly, visiting the local playground, and mixing with other children—and that they do would do this regardless of ECC attendance, rendering the benefits for those that attend over those that stay at home relatively small.

 

On the other hand, the parents less likely to send their child to a care center, but who do so when progressive expansion makes getting a place much easier, may not provide those socioemotional skills-building experiences at home, and so their children benefit hugely by attending care centers. This is particularly true for boys, immigrants, and children from less-educated families.

 

Strong Justification for ECC Investment

 

Our findings have important implications for policymakers regarding equality of opportunity for children from less advantaged backgrounds, improving the life chances of boys, and maximizing educational performance and the contribution of future generations to nations’ economic prosperity. In addition, they raise the issue of what measures to give weight to when assessing the benefits of ECC.

 

The findings also provide ammunition for policymakers and politicians lobbying for more extensive provision of affordable, good-quality early childcare. There are strong incentives for governments to invest in ECC provision and expansion. Indeed the evidence suggests that, if there is good availability of ECC, quality of provision is tightly regulated, and there is a focus on particular educational outcomes, certain groups of children should be encouraged to attend.

 

Of course, whether this evidence in clear support of ECC provision will be enough to settle the debate about the benefits of early childcare is another matter entirely.

 

Rafael Lalive is Professor of Economics at HEC Lausanne, the Faculty of Business and Economics of University of Lausanne. He is also affiliated to CEPR, CESifo, IFAU, IZA, and NBER.

 

Christina Felfe is Assistant Professor of Empirical Economics at the University of St. Gallen. She is also affiliated to CESifo and the Competence Network Early Childhood.

 

The authors thank Steve Coomber for assistance in drafting this post. 

 

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