A Welfare Analysis of Universal Childcare: Lessons From a Canadian Reform

A Welfare Analysis of Universal Childcare: Lessons From a Canadian Reform

Sébastien Montpetit (University of Warwick)

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ABSTRACT:

We assess the welfare impact of the introduction of universal daycare services in Québec in 1997. Unlike the standard sufficient-statistic metric, which assumes marginal changes in fiscal policy, our approach accounts for the non-marginal nature of the program and quantifies nonpecuniary benefits. Through a structural model of childcare demand, we estimate substantial welfare gains from the policy, yielding a Marginal Value of Public Funds (MVPF) above 3.5. Using the sufficient-statistic approach underestimates welfare gains by half. Counterfactual simulations and a difference-in-differences analysis suggest that increasing availability, rather than solely improving affordability, is crucial for the effective design of universal programs.

BIO:

Sébastien Montpetit is an applied microeconomist and a Postdoctoral Fellow at the University of Warwick. He received his PhD from the Toulouse School of Economics. His research fields are empirical public and gender economics. His current research focuses on childcare policies, empirical methods for welfare analysis, the economic integration of women and minorities in developed countries, and gender-based violence. He studies these questions by combining rich microdata with causal inference techniques and structural models.