Introduction

Publicly provided universal child care is a prominent policy goal globally, intended to bolster maternal labour supply and mitigate the economic penalties associated with childbirth. This research examines the life-cycle impacts of the heavily subsidised, universal child care programme introduced in Quebec, Canada, in 1997. While short-term impacts are well-documented, this study provides a comprehensive account of long-run effects on maternal labour market outcomes, earnings, and the resulting fiscal consequences spanning 26 years since the programme’s inception.

Previous literature

Current literature primarily focuses on the short-term effects of child care on maternal work. Some medium-term studies report increases in employment five to ten years post-birth, but few take a life-cycle perspective. This study advances the field by analysing the reform’s impact immediately following birth and tracking individual-level earnings into later life, specifically up to age 50. It builds upon emerging research from Denmark and Finland but offers more recent data relevant to modern labour market structures and gender norms.

The Quebec family plan

The Quebec universal child care programme launched in 1997 with $5-a-day spaces for four-year-olds. It was phased in annually, covering children aged zero to one by the year 2000. Parents paid a fixed daily rate while the provincial government provided subsidies to providers. This rollout meant that by 2004, children could have experienced five full years of subsidised care. The plan also included the expansion of after-school programmes and full-day kindergarten to support working parents.

Data sources

The analysis utilises two primary data sets: the Canadian Labour Force Survey (LFS) and the Longitudinal Administrative Databank (LAD). The LFS provides detailed monthly information on labour market activity, including hours worked and occupations. The LAD, a 20 per cent random longitudinal sample of Canadian tax returns from 1982 to 2022, allows for the construction of comprehensive family and income histories. Together, these sources facilitate the tracking of mothers as their children age and move out of the household.

Programme eligibility/exposure

The study employs three measures of programme exposure to determine long-term impacts. These include a contemporaneous measure for mothers with children currently in care, a backward-looking measure based on previous eligibility for children aged zero to four, and a lifetime exposure measure. The latter calculates the proportion of a mother’s childbearing years during which her children were eligible for the Quebec programme. This enables researchers to compare cohorts with varying degrees of exposure while controlling for broader economic trends.

LFS analysis

Initial findings from the LFS show that mothers with children aged zero to four were 5.2 percentage points more likely to work when fully exposed to the programme. This impact is primarily observed in full-time employment. Crucially, the employment effect persists as children age, remaining significant until the youngest child reaches age 15. The results suggest the programme successfully changed life-cycle employment trajectories rather than merely providing a temporary boost during the preschool years.

LAD analysis

The longitudinal data reveals a growing impact on both participation and earnings. For women in their 30s, the employment effect ranges between 7 and 10 percentage points, rising to 12 percentage points by age 50. The earnings impact is even more substantial, reaching 27 per cent of baseline earnings at age 50. At age 30, earnings are estimated to increase by $3,479 per year, which is 12 per cent of the mean. In the bottom row at age 50, the estimate rises to $16,743, which is 30.3 per cent of the mean for Quebec mothers.

Mechanisms

The researchers rule out selection bias, noting that impacts were concentrated among mothers with lower and middle education levels. The increase in weekly earnings is attributed to higher hourly wages and increased labour supply on both extensive and intensive margins. Analysis suggests that approximately two-thirds of the wage growth occurs within the same occupation, driven by increased labour market experience and occupational upgrading. The programme resulted in an average of 1.71 additional years of work by age 50, which alone accounts for a significant portion of the wage rise.

Fiscal analysis

The long-term rise in maternal earnings translates to higher tax remittances and reduced reliance on social assistance and employment insurance. The study estimates that the net present value of these fiscal benefits recaptures between 75 and 117 per cent of the programme’s upfront costs, depending on the discount rate used. Even with a 3 per cent real discount rate, conservative capped estimates correspond to a fiscal recovery of 75 cents for each dollar of cost. Most fiscal benefits are back-loaded, appearing as mothers reach their peak earning years.

Conclusion

The Quebec universal child care programme has had a profound, enduring impact on maternal labour supply and income. By facilitating continuous labour market attachment, the policy allows mothers to achieve higher-paying occupations and accumulate valuable experience. The findings reinforce the importance of flexible caregiving support in narrowing gender career trajectories and demonstrate that universal child care can be a fiscally sustainable investment for governments.