DP9274 Early Child Care and Child Development: For Whom it Works and Why

Author(s): Christina Felfe, Rafael Lalive
Publication Date: January 2013
Keyword(s): child care, child development, marginal treatment effects
JEL(s): I21, I38, J13
Programme Areas: Labour Economics
Link to this Page: www.cepr.org/active/publications/discussion_papers/dp.php?dpno=9274

Many countries are currently expanding access to child care for young children. But are all children equally likely to benefit from such expansions? We address this question by adopting a marginal treatment effects framework. We study the West German setting where high quality center-based care is severely rationed and use within state differences in child care supply as exogenous variation in child care attendance. Data from the German Socio-Economic Panel provides comprehensive information on child development measures along with detailed information on child care, mother-child interactions, and maternal labor supply. Results indicate strong differences in the effects of child care with respect to observed characteristics (children’s age, birth weight and socio-economic background), but less so with respect to unobserved determinants of selection into child care. Underlying mechanisms are a substitution of maternal care with center-based care, an increase in average quality of maternal care, and an increase in maternal earnings.