Dealing honestly with some fraught questions

by John Richards and Matthew Brzozowski

 Raising the next generation is a preoccupation of adults, and debates over how best to do it surely predate recorded history. In earlier times, religious leaders or village elders pronounced on the rights and wrongs of parenting. In our secular age, the decisions of politicians, the conclusions of academic policy analysts and the arguments of advocates loom large. Not surprisingly to anyone who is a parent, the matter remains unresolved.

Here in Canada, one dimension, the appropriate role for nonparental education and care of preschool children, has become a major component of the national political dialogue – what has become known as the child care debate. Some OECD countries – notably Scandinavian countries and France – provide universally accessible, heavily subsidized centres for preschool children. So does Quebec, where the Centres de la Petite Enfance (CPEs) are accessible in principle to all parents on payment of $7 per child per day. The annual cost of a comparable Canada-wide program would be between $8 and $10 billion.

In the 2004 Speech from the Throne, Paul Martin’s government announced its intention to promote “high quality,” “universally inclusive,” essentially publicly financed child care centres “focused on enhancing early childhood learning opportunities.” Such a program falls within the jurisdiction of the provinces. To induce their cooperation, the 2005 budget offered conditional grants, amounting to $5 billion over five years. To gain access to the funds, provincial governments agreed during 2005 to launch programs consistent with the following guidelines:

• Quality – evidence-based, high quality practices relating to programs for children, training and supports for early childhood educators and child care providers, and provincial/territorial regulation and monitoring.
• Universally inclusive – open to all children, without discrimination.
• Accessible – available and affordable for those who choose to use it.
• Developmental – focused on enhancing early childhood learning opportunities and the developmental component of programs and services.¹

During the recent election campaign, the Conservatives described all this as a “one-size-fits-all plan to build a massive child care bureaucracy which will benefit only a small percentage of Canadians.” Instead, they proposed, “let parents choose what’s best for their children, and provide parents with the resources to balance work and family life as they see fit – whether that means formal child care, informal care through neighbours or relatives, or a parent staying at home.” The Conservatives promised to scrap the Liberal subsidy to provincial child care programs and instead give $1,200 annually to parents for each child under age six. This is a promise kept. The Liberals’ conditional grant program has now been cancelled; the details of the $1,200 per child grant have been announced in the 2006 budget.

Why is Canadian child care policy lurching from one strategy to another? We see three underlying reasons.

The first is a Kulturkampf between feminist child-care proponents and defenders of at-home parenting. The majority of women in Canada want to be able to have children but not be defined by motherhood: mothers want to participate in the world of work on terms comparable to fathers. If we define feminism in this loose manner, most Canadian women are now feminists.

Over the last half-century, female labour force participation has dramatically increased. This is so even among mothers of young children. As recently as the mid-1970s, fewer than one third of mothers with children under age six were employed; as of this decade, two thirds are. If women’s expectations are to be fully realized, most feminist advocates argue, high-quality, state-subsidized child care should be available – as Quebec has undertaken and Martin’s government promised.

But opponents – some of whom also define themselves as feminists – argue: why should our taxes finance your lifestyle choice? If you want to work outside the home, fine. But do not distort the choice of nonparental child care versus at-home parenting by massively subsidizing the former. If government is to spend money helping parents raise young children, it should provide money to parents and let them decide.

A second reason for controversy – not altogether independent of the first – is the increase in divorce and in births to never-married mothers. The overwhelming majority of single-parent families are headed by women, and most are poor. In most OECD countries, Canada included, government strategies to aid poor families with children shifted over the last two decades: less untied financial aid, more aid conditional on the parent’s agreeing to work. Motivating this shift toward workfare has been concern with intergenerational welfare dependency and evidence of the positive role-model effect on children of working parents. Financial support for single mothers, even for mothers of young preschool children, is no longer deemed to be a right. Once their children are above, say, age two, social service agencies often classify single parents as employable and aid is made conditional on their working. As a result, two thirds of children aged six months to five years in single-parent families are now in some form of nonparental care. This shift has created an obvious demand for child care. Needless to add, this area of social policy is fraught with controversy.

A third source of controversy turns on divergent results from academic assessments of the question: relative to at-home parenting, is nonparental care and early childhood education inherently beneficial to the development of children? The honest answer, which satisfies neither side in the debate, is: it depends.

Cost-benefit analyses

Public initiatives such as child care have been subjected to cost-benefit analysis. The essence of this technique is to evaluate all costs and all benefits in each year for the duration of the initiative in monetary terms by calculating how much people would be willing to pay to receive the benefits or to avoid the costs, then to sum both benefits and costs over the lifetime of the initiative (discounting such that costs and benefits far in the future are weighted less than those arising sooner). If the sum of the (discounted) benefits exceeds the sum of the (also discounted) costs, the initiative is deemed worthwhile.

It may seem crass to place dollar values on concepts such as improved child learning or quality of parenting, but the technique has the virtue of forcing us to think clearly about the impacts of public initiatives that can be readily evaluated, and to decide whether the hard-to-measure benefits and costs tip the balance in favour or against. Cost-benefit analysis does not eliminate discretion and judgement: it concentrates discretion and judgement on the dimensions of real uncertainty.

Gordon Cleveland and Michael Krashinsky, both at the University of Toronto, have conducted the major cost-benefit study of a national child care program in Canada.² They estimated annual benefits of $10.2 billion and costs of $7.9 billion, and hence concluded that such a program makes sense. In cost-benefit terms, child care programs generate two major categories of benefits:

BENEFIT 1: Value of income generated by parents who, as a result of child care, work outside the home.

Studies consistently show that child care programs induce more mothers to enter the labour force. The income earned by these additional workers is a benefit. Admittedly, in the case of workfare programs for single parents, entry into the labour force may not be voluntary. Cleveland and Krashinsky estimated the annual value of these increased earnings at $6.2 billion.

BENEFIT 2: Enhanced educational performance of children.

The most important measurable benefit that child care programs may generate is improved school performance in subsequent stages of children’s education. Some studies have evaluated this benefit in terms of avoided costs: less grade repetition by the children, lower juvenile crime rates due to lower school dropout rate and so on. Other studies have estimated the increase in expected future lifetime earnings among children who have passed through good child care programs. Cleveland and Krashinsky took yet another approach. They estimated the value placed on child care by well-off parents who used child care for their children and extrapolated it to a national level. Their estimate of this benefit from a Canada-wide program was $4 billion annually.

Since introduction of the Head Start program in the United States in the 1960s, there have been many rigorous studies attempting to measure the impact of child care programs on the subsequent performance of children. Isolating the impact of child care from all other relevant factors is a daunting task. One approach is to conduct small-scale experiments in which children are randomly assigned to a “treatment” group (that receives child care) and a “control” group (that does not). This randomization avoids many sources of potential bias and provides a reasonable presumption that any statistically significant difference in outcomes between the groups is due to participation in the program. But small-scale experiments suffer from other problems. They may, for example, enjoy particularly dedicated staff and generous funding, conditions unlikely to be replicated on a large scale. Large-scale studies covering, say, an entire city or state may introduce bias by choice of control group, but have the advantage of studying programs in a more representative administrative context.

For a forthcoming monograph, one of us (Matthew Brzozowski) has reviewed relevant studies and surveys on all this. Table 1 summarizes our assessment. Particularly in early years of primary school, most studies find that children who have passed through quality child care programs perform significantly better than the control group of children. At higher grades, the benefits tend to fade: the proportion of studies finding significant gains for the treatment over the control group declines.

As for the costs, there are again two broad categories:

COST 1: Costs of providing child care services.

In 1998, Cleveland and Krashinsky estimated total annual costs of a Canada-wide child care program at $7.9 billion. However, any such estimate must be treated with caution. Since child care is a labour-intensive service, small changes in the ratio of caregivers to children or in ratio of professional to nonprofessional caregivers changes costs dramatically. Professional caregivers legitimately command a higher income than informal care providers, such as those who take a few children into their homes.

Unionization of employees, as in the case of Quebec’s CPEs, has created an additional source of rising costs. The union has become an effective monopoly with the ability to extract high wages through threats to shut down the entire system. In the summer of 2005, the union threatened to close all CPEs at the beginning of the school year, a time chosen to inflict maximum disruption on parents. To avoid such a strike, the Quebec government allocated additional revenues to the CPEs. Initially set at $5 per child per day, the present $7 per day covers no more than a quarter of total costs of Quebec CPEs. Additional annual costs borne by the Quebec government are about $1.5 billion. The application of Quebec’s employment equity law means that the salaries of CPE employees will again rise perceptibly in the next few years.

Cost 2: Potential harm to children’s development.

Most rigorous studies showing benefits to children have been conducted in the United States, on programs targeting children “at risk” because of potentially weak parenting or adverse social conditions – children of single-parent or low-income families, or children living in ghetto-like urban neighbourhoods with weak schools. But what about “non-risk” children in stable, middle-class, two-parent families? Do they benefit equivalently from child care programs? Some insist the answer is yes.³ But the authors of an important recent study of Quebec’s experience since inauguration of the CPEs say no.

Like Tommy Douglas’s decision to implement medicare in Saskatchewan in the early 1960s, the decision of Lucien Bouchard’s government to put in place a provincewide child care program is an example of federalism enabling large-scale social policy experimentation in one province. By the early years of this decade, more than half of Quebec children aged six months to five years were in child care centres. This is twice the rate for any other province.

Michael Baker, Jonathan Gruber and Kevin Milligan, authors of the controversial assessment of Quebec’s child care experiment,⁴ used data available from the National Longitudinal Study of Children and Youth (NLSCY). This is an ambitious survey, organized by Statistics Canada, to survey random samples of children in – so far – five “waves.” The first wave was conducted in 1994–95, the second in 1996–97, the third in 1998–99, the fourth in 2000–2001 and the fifth in 2002–3. Each wave includes approximately 2,000 children. As the authors state, “The dataset provides information on a rich set of child care choices as well as tracking children’s development, parental and teacher evaluations, test scores, and class rankings.”

The authors found the expected increase in mothers’ labour force participation due to the CPEs. What has caused controversy is their conclusion about psychological effects on the children:

We … find consistent and robust evidence of negative effects of the policy change on child outcomes, parenting, and parent outcomes.

Child outcomes are worse for a variety of parent-reported measures, such as hyper-activity, inattention, aggressiveness, motor/social skills, child health status and illness. Parental interactions with children are worse along all measured dimensions, and there is some evidence of deterioration in parental health and a reduction in parental relationship quality. These are subjective measures, but the consistency of the results suggests that more access to child care is bad for these children (and, at least along some dimensions, for these parents).

Figure 2 reproduces a sample of their results. The figures track the scores in Quebec and the rest of Canada for several measures over successive waves of the NLSCY. As measured, hyperactivity declined between the first and fifth waves, but less in Quebec than elsewhere. While Quebec children were less anxious than children elsewhere in Canada in waves prior to the CPE program, that was no longer true in 2002–3. Quebec children remained less aggressive than children elsewhere, but the gap closed between the first and fifth waves of the survey. Finally, Quebec children’s increased participation in child care centres seems to have induced lots of nose and throat infections.

The authors acknowledge that there are “more benign” interpretations of their data. Perhaps, they suggest, they have documented short-term problems of adaptation, impacts that will fade over time as parents and caregivers adapt. Some of their negative results seem marginal: with relatively more children in child care, it is not surprising to find a higher incidence of infections. Arguably, this is not a cost. Quebec children are merely gaining immunity to normal childhood illnesses at an earlier age than children elsewhere.

The most important qualification to these results is to note that the comparison group is children from two-parent families. The authors excluded children from single-parent families because, before the introduction of the CPEs in 1997, Quebec subsidy to child care for such families was already far more generous than elsewhere in Canada and so introduction of “five-dollar-a-day” CPEs did not mean a significant change in policy.

Targeted or universal?

While no single study is definitive, these results are important. At the very least, they generate serious doubt about whether the benefits for ordinary two-parent families of a Canada-wide child care program would outweigh the costs, both financial and psychological. On the other hand, the benefits from targeted programs for children in “at risk” families have been well documented – although, even here, expectations should be modest. A good preschool child care program is not enough to guarantee that “at risk” children will complete high school successfully, avoid teenage pregnancy or distance themselves from a culture of crime.

As already noted, most rigorous evaluations of child care programs have been conducted in the United States, and most such programs have been targeted at disadvantaged “at risk” families. In his survey of evaluations of U.S. programs, Steven Barnett stresses the idea that benefits are likely to be a function of the “gap” between the quality of the child care centre and home environment. Where the “gap” is negligible or negative, the net benefits are likely to be negligible or negative:

Benefits from programs appear to be produced via a number of different types of programs and across a number of different groups of children. Indeed, the best predictor of the size of program effects may be the size of the gap between the program and home as learning environments, rather than whether a child is a member of a particular group. Thus, effects might be expected to be largest for the most disadvantaged, though there is no evidence that meaningful effects cease if a child’s family moves above the poverty line. Indeed, there is even some suggestion at the other end of the income spectrum that children from very well-off families may suffer from inferior to that provided by their homes.⁵

The Rand Corporation published another survey of program evaluations that arrived at a similar conclusion on the importance of the “gap” between the centre and home environment.⁶ For example, the Prenatal and Early Infant Program in Elmira, New York, enrolled 400 disadvantaged families. Each received regular home visits by nurses who, in addition to providing nursing and parenting advice, linked families to other social services. The evaluation divided families between high-risk (headed by a single parent and classified as particularly low-status) and low-risk (the remainder). Among the former, average per-child benefits were estimated to be four times costs. Among the latter, per-child benefits were below costs.⁷

Another problem with nominally universal programs is that they are not universal. Participation is not mandatory as is, for example, K–12 education. And the number of regulated spaces is limited relative to the demand that arises at heavily subsidized rates. Several analysts have documented that upper-middle-class Quebec families have been more adroit at gaining access to the spaces available than the less affluent. Pierre Lefebvre found that, as of 2001, among families with annual incomes above $60,000, nearly three in ten preschool children were in subsidized spaces; among families with incomes below $40,000, only one in ten.⁸ Christa Japel, Richard E. Tremblay and Sylvana Côté reported a similar problem of access by the poor.⁹ To spend $1.5 billion of public revenue in a program that disproportionately targets the well-to-do, whose children may not benefit (if Baker, Gruber and Milliken are right), is a perverse and regressive use of public monies.

Two recommendations and some concluding thoughts

On the basis of the evidence, the Liberals’ program to induce provinces to launch universal child care programs was not justified. On the other hand, good-quality child care programs targeted to disadvantaged families can almost certainly generate significant benefits. While our knowledge of the various effects of these programs is incomplete and more research is needed, what we do know leads to two specific policy recommendations.

Recommendation 1: The provinces should ensure access to reasonable quality child care programs for targeted categories of families likely to be disadvantaged in terms of preparing children for formal K–12 schooling.

Most antipoverty analysts in the United States, Britain and – to a lesser extent – Canada have concluded that the role-model effect of a working parent is important in reducing intergenerational poverty, even in the case of single parents with young preschool children. If these parents are required to work as a condition of receiving benefits, they need child care. Writing about welfare-to-work programs in the United States, Janet Currie (2001) concluded that “ society can be thought of as having made a commitment to poor mothers that it will pay for child care of at least mediocre quality if they work.”¹⁰ Canada has struck a similar deal, with important differences across existing provincial programs.

recommendation 2: Child care centres should be located in neighbourhoods with high ratios of “at risk” families whose children are most likely to benefit. Any subsidies for fees should be geared to income. For families with annual incomes above $30,000, subsidies should be clawed back with the expectation that the subsidy will be eliminated for families with incomes above $50,000.

Targeting is hard to do well. One means is by location of the centres. If located in low-income neighbourhoods, local low-income parents have easier access. Family income is an administratively simple but overused means of targeting. Programs that are targeted in this way often lead to excessive effective tax rates within the clawback range.¹¹ To accommodate these problems, the suggested phaseout may need revision.

A final observation. Elsewhere, people are experiencing sectarian conflicts, civil wars or desperate poverty. That our most intense debate this year turns on Harper’s overturning Martin’s child care policy is proof of just how lucky we are in this corner of the globe.

Notes

¹ Canada, “Early Learning and Child Care Initiative,” Budget Plan, 2005. Available online at http://www.fin.gc.ca/budget05/bp/bpc4ae.htm

² Gordon Cleveland and Michael Krashinsky, The Benefits and Costs of Good Child Care: The Economic Rationale for Public Investment in Young Children (Toronto: University of Toronto, Centre for Urban and Community Studies, Childcare Resource and Research Unit, 1998). Available online at http://www.childcarecanada.org/pubs/other/benefits/

³ A prominent Canadian academic advocate of universal child care is Fraser Mustard. See, for example, a 1999 report prepared for the Ontario government (Margaret McCain and J. Fraser Mustard, Early Years Study: Reversing the Real Brain Drain). Another prominent advocate is Martha Friendly. See Gillian Doherty, Martha Friendly and Jane Beach, OECD Thematic Review of Early Childhood Education and Care Canadian Background Report (Ottawa: Social Development Canada, 2003), available online at http://www.sdc.gc.ca/en/cs/sp/sdc/socpol/publications/reports/2004-002623/page01.shtml

⁴ Michael Baker, Jonathan Gruber and Kevin Milligan, Universal Childcare, Maternal Labor Supply and Family Well-Being, Working Paper 11832 (Cambridge, MA: National Bureau of Economic Research, 2005). Available online at http://www.nber.org/papers/w11832

⁵ W. Steven Barnett, “Long-Term Effects of Early Childhood Programs on Cognitive and School Outcomes,” The Future of Children (Long-Term Outcomes of Early Childhood Programs), Vol. 5, No. 3 (1995).

⁶ Lynn A. Karoly, Peter W. Greenwood, Susan S. Everingham, Jill Hoube, M. Rebecca Kilburn, C. Peter Rydell, Matthew Sanders and James Chiesa, Investing in Our Children: What We Know and Don’t Know About the Costs and Benefits of Early Childhood Interventions (Santa Monica, CA: Rand Corporation, 1998). Available online at http://www.rand.org/publications/MR/MR898/

⁷ Capitalized using a 4 per cent discount rate, benefits were restricted to those accruing to government. The most significant items arose from higher employment among the parents. This led to significant reductions in welfare payments and higher employment taxes paid. Another significant benefit was lower justice system costs due to lower projected criminal behaviour among targeted children.

⁸ Pierre Lefebvre, “Quebec’s Innovative Early Childhood Education and Care Policy and its Weaknesses,” Policy Options, March 2004, pp. 52–57.

⁹ Christa Japel, Richard E. Tremblay and Sylvana Côté, “Quality Counts: Assessing the Quality of Daycare Services Based on the Quebec Longitudinal Study of Child Development,” Choices, Vol. 11, No. 5. Montreal: Institute for Research on Public Policy, 2005. Available online at http://www.irpp.org

¹⁰ Janet Currie, “Early Childhood Education Programs,” Journal of Economic Perspectives, Vol. 15, No. 2 (2001), pp. 213–38.

¹¹ Thus, Ottawa and the provinces have devised generous targeted benefits for low-income families with children. Over the $20,000–$35,000 family income range, these benefits are aggressively clawed back. Over this range, Canadian families with two or more children typically get to keep less than 40 cents of each additional dollar earned. They face an effective tax rate (tax rate on earnings plus clawback rate on targeted benefits) above 60 per cent.