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February 24, 2020

Is putting children in childcare good for them?

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Affordable childcare—or the lack of it—continues to be a pressing issue for many countries. A major rationale for countries to provide subsidized childcare is that it enables women to participate in the workforce, thereby adding to economic growth. 

Young children in daycare (whether center-based or family-run, and independently of childcare quality and child temperament) experience a rise in their levels of cortisol—the body’s main stress hormone—on the days they spend in childcare as opposed to the days they spend at home. The effect is driven by children under the age of three and may result from them experiencing stressful interactions in a group setting at a very early age. 

At the same time, the first 1,000 days of a child’s life are when the brain is most amenable to learning. This is when parents and society should be investing most in children, laying a strong foundation for later learning. Relying on a single caregiver (typically the mother) to stimulate their child can limit the learning environment if that caregiver has a low level of education. Formal high-quality childcare with professionally trained staff can promote learning and thereby facilitate social mobility in later life. 

The Scandinavian countries were some of the first to offer universal childcare, starting in the 1960s and 1970s. These programs were available to children from about the age of 12 months, or even earlier. The earliest cohorts of children who used public daycare systems have therefore now completed their education and entered the labor market. They provide a good test case of whether there are long-term detrimental effects on children from attending childcare at an early age.

In North America, too, there are some notable examples of universal childcare programs. Under the Lanham Act (1940) in the US, a subsidized, near-universal childcare program was rolled out during World War II. Currently, universal pre-K (pre-kindergarten) programs exist in Georgia and Oklahoma. In Quebec, Canada, a large-scale expansion of low-fee subsidized childcare for all children under five was launched in 1997 and has been expanding ever since.  

The evidence from the US and the Scandinavian countries shows significant long-term gains for the children’s academic performance, college attendance, labor market participation, and wages. This could have resulted because the alternative to childcare in these settings was care provided by family members (grandparents, and so on) or nannies. Children in Georgia and Oklahoma who experienced universal pre-K also tended to do better in terms of test scores in middle school, but mainly if they were from low-income backgrounds. 

The Quebec experience, though, shows detrimental long-term effects on non-cognitive skills, which include things like emotional maturity, empathy, interpersonal skills, and verbal and non-verbal communication. This may, however, be due to a too-rapid expansion in the early years of the system when sufficient staffing and space were unavailable, such that not all centers were high quality. Furthermore, the first children enrolled in the program had well-educated mothers, who could offer high-quality care themselves.

Expansions of maternity leave schemes in Germany and Denmark, lengthening the time that mothers can stay home and look after their children, have produced no positive long-term effects on children’s educational attainment or earnings. Again, this may be due to the existence of a high-quality outside care option in these settings, or because parents who work make up for lost time investments in their children outside of work by giving up other activities or spending more quality time with them. 

Taken together, the findings point to positive effects of formal childcare in settings where the alternative is inferior. They also point to strong effects for children from low socioeconomic status backgrounds. 

So, is there a case for expanding childcare to all children, also those from high-income backgrounds whose mothers can provide their own high-quality care at home? What about the lasting effects on people’s mental health of being exposed to stress at an early age?

There are several arguments for why providing universal childcare may still be a good idea. First, studies find that childcare is likely to have neutral effects on children from high-income families, that is, it is not harmful and is as good as maternal care. Second, children are exposed to peers from much broader backgrounds when the care is universally provided. Indeed, attending universal childcare with a broad set of peers reduces eventual income differences, enhances intergenerational mobility, and equips children with the skills to handle diversity later on in their lives. 

On the economic side, the financial and opportunity costs of high-educated women staying at home are borne not just by the individual but also by society. There would be broad popular support for a universal program, and that is necessary for ensuring sufficient priority is given to the issue by policymakers. 

Most of the beneficial long-term effects of attending childcare have been found so far for cognition-related (education and earnings) outcomes. Effects on non-cognitive outcomes, and physical and mental health are now being studied more. The age at which most children enter daycare coincides with the developmental phase when separation anxiety is at its highest. Especially for small children, the hours spent in daycare should be kept low. Furthermore, the daily experiences of children interacting with caregivers and other children should be observed systematically. 

© Nabanita Datta Gupta

Read Nabanita Datta Gupta's IZA World of Labor article “Maternity leave versus early childcare—What are the long-term consequences for children?

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We recognize that IZA World of Labor articles may prompt discussion and possibly controversy. Opinion pieces, such as the one above, capture ideas and debates concisely, and anchor them with real-world examples. Opinions stated here do not necessarily reflect those of the IZA.