The case for investing in good quality early child care

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Two researchers look at the controversial issue of whether Early Child Care for very young children (under the age of three) provides benefits over care at home. And if so, whether it benefits children to a different degree depending on their circumstances.

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Rafael Lalive is a professor of Applied Economics and Econometrics. His research interests include social economics, labor economics, public economics, microeconometrics.

Over recent decades, in many developed economies, there has been a trend for more mothers with dependent children to go to work. At the same time, policymakers have tried to increase the availability of childcare provision through various initiatives, some government driven, some market led, some a mix of both. With more young children spending longer hours away from their mothers with third party care providers, questions have been raised about the impact of childcare on a child’s development. What impact does childcare have? Does it benefit children to a different degree depending on their circumstances? Does childcare have an impact on the outcomes for young children later in life? Or is childcare a poor substitute for care provided at home?

These are some of the issues that Rafael Lalive (HEC Lausanne, University of Lausanne) and Christina Felfe (University of St-Gallen) considered when they investigated the impact of Early Child Care (ECC), offered to children under the age of three, on child development. They were able to do so because of a particular set of circumstances in Germany that allowed them to compare the performance of children brought up at home with those using childcare.

ECC in West Germany, up to three years of age, is delivered by state run care centres. These centres operate under a clear educational mission. There is a focus on developing children’s analytical, language, and motor skills, governed by strict guidelines. Tight regulations govern hours, group size, staff-child ratios, and staff qualifications. The childcare is heavily subsidized by the government.

In 2013, all children aged one and over were legally entitled to a childcare place. Prior to this demand for ECC places far exceeded supply, with the number of places increasing gradually after a federal government program of expansion was initiated in 2005.

Lalive and Felfe studied aspects of childhood development performance for six cohorts of children that attended care centres from 2003 to 2011 inclusive. This was a period of “modest” expansion of ECC attendance from 7% to 27%. They looked at children’s development performance for language, motor, and socio-emotional skills, all of which were tested in West Germany during a compulsory medical screening at the age of six.

The three dimensions are predictors of social and economic success later in life, including educational achievement and labor market performance. Of particular interest, the socio-emotional component looks at issues such as behavioral problems, emotional instability, hyperactivity and peer relationships. This dimension is not part of the educational mission for care centers, unlike language and motor skills.

As well as looking at the relative performance of children attending from 2003 to 2011 inclusive they also estimated findings for a simulated period of “progressive” expansion from 27% to 50% attendance, in order to assess the implications of different policy approaches to the expansion of ECC.

The authors were also able to separate out the impact of ECC on children depending on characteristics such as gender, migrant status, the educational attainment of parents, as well as the attitude of parents towards sending their children to ECC.

The positive impact of early child care

The findings provide strong support for extensive provision of affordable, good quality early child care. Under the moderate reform conditions, i.e. when attendance increased from 7 to 27%, which covers the average expansion rate during the period from 2009 to 2014 and the cohorts of children studied, all the children studied benefitted from ECC with respect to motor skill development. Similarly, the impact of ECC on language development under moderate reform conditions, while more modest, is also positive, with immigrant children gaining the most.

Perhaps most interesting is the impact of ECC on the socio-emotional component. Under moderate reform conditions the socio-emotional advantages from attending ECC are minimal for all the children, if slightly less so for boys. With progressive expansion, however, boys, children with less educated parents, and immigrants all benefit significantly from ECC with respect to socio-emotional skills.

One possible explanation for this finding is linked to the likelihood of parents to use ECC. Under modest reform conditions, with ECC places allocated on a first come first served basis, it is the children of parents most determined to obtain a place for their child, and who place the greatest value on ECC, that attend ECC. But as the availability of places increases under progressive reform conditions, more children are able to attend regardless of the value placed on ECC by their parents.

Parents most likely to send their child to a care center, even when places are relatively scarce, may have a better understanding of what it takes to foster socio-emotional development – meeting other families regularly, visiting the local playground, mixing with other children – for example. And that they would encourage these types of activity regardless of ECC attendance, rendering the benefits for those that attend over those that stay at home relatively small.

However, parents most likely to put their child in ECC as progressive expansion makes getting a place easier, may not provide appropriate social-emotional building experiences at home. As a result, their children benefit hugely by attending care centers. And this is particularly true for boys, immigrants, and children from less-educated families.

The comparative advantages of ECC over care at home may seem relatively insignificant given the young age of the children studied. However there is existing research literature that provides strong evidence for claiming that even at this young age, any positive impact of ECC may stretch well into later childhood years and adulthood. (1)

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

(1) See the review by Heckman and Masterov (2007): James J. Heckman & Dimitriy V. Masterov, 2007. “The Productivity Argument for Investing in Young Children“, Review of Agricultural Economics, American Agricultural Economics Association, vol. 29(3), pages 446-493, 09.


Related research paper:

Christina Felfe, Rafael Lalive (2018), Does early child care affect children’s development?, Journal of Public Economics, 159:33-53.


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