Universal Childcare, Maternal Labor Supply, and Family Wellbeing

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 "crowd-out" of existing childcare arrangements, the impact on female labor supply, and the effects on child well-being. The introduction of highly-subsidized universally-accessible childcare in Quebec in the late 1990s provides an opportunity to address these issues. We carefully analyze the impacts of Quebec's "five dollar per day childcare" program on childcare utilization, labor supply, and child (and parent) outcomes among 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 comparable in magnitude to previous credible estimates. Finally, we uncover 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.