Investing in Mothers? The Long-Run Impact of a Universal Child Care

Investing in Mothers? The Long-Run Impact of a Universal Child Care Program on Maternal Work and Income We provide new estimates of the effects of universal child care on the long-term labor outcomes of mothers, documenting the life-cycle impact of Quebec’s universal, subsidized child care program on maternal labor supply, earnings, social program benefit receipt and tax remittances. We find an enduring positive impact on mothers’ employment long after children have aged out of the preschool years. There is also a long-run impact on earnings which grows to be twice as large as the participation effect. This arises because of growth in the intensity of labor force participation and a rise in hourly wages over time, suggesting that initial investments in work have multiplier effects later in women’s careers. There is clear evidence of occupational upgrading but most of the growth is within occupation, including the impact of more labor market experience in the years after children are out of child care. We show that, as a result, tax remittances grow over the lifecycle, and social assistance and employment insurance receipts fall. Our estimate of the fiscal balance of these effects reveals that the net present value of the flow of fiscal benefits may recapture between 75 and 117 percent of the upfront costs of the program. Acknowledgements and Disclosures We thank Leo Ma for excellent research assistance and seminar participants at Carleton, Universidad de Chile, HEC Montreal, University of Illinois, Michigan, MIT, NBER Summer Institute, Northwestern, Queen’s, SOLE meetings, the UBC Stone Breakfast, and the University of Victoria for helpful comments. Timea Molnar provided help with the occupation coding. Baker gratefully acknowledges the research support of a Canada Research Chair at the University of Toronto. Much of the analysis for this paper was conducted at the British Columbia Interuniversity Research Data Centre (SFU and UBC branches), which is part of the Canadian Research Data Centre Network (CRDCN). The services and activities provided by the CRDCN are made possible by the financial or in-kind support of the SSHRC, the CIHR, the CFI, Statistics Canada and participating universities whose support is gratefully acknowledged. The views expressed in this paper do not necessarily represent the CRDCN’s, nor that of its partners, nor that of the National Bureau of Economic Research. Kevin S. Milligan This document attempts to disclose completely my potential conflicts of interest, using the guidelines of the American Economic Association. Sources of support: “Each author of a submitted article should identify each interested party from whom he or she has received significant financial support, summing to at least $10,000 in the past three years…” The following corresponds to the calendar years 2023-2026. Below is a complete listing of sources of support that exceed $10,000. For several of these, a grant flowed through a research organization. I have tried to list both the research organization and ultimate source of the funds. 1. University of British Columbia: salary. (2023 2024 2025 2026) 2. Canadian Institutes of Health Research: Insight Development Grant. (2023 2024 2025 2026) 3. Employment and Social Development Canada: personal services agreement for consulting, re microsimulation (2023 2024 2025) Relevant paid or unpaid positions: “Each author should disclose any paid or unpaid positions as officer, director, or board member of relevant non-profit advocacy organizations or profit-making entities.” The following list covers activities in the years 2023-2026: 1. Editor, Canadian Tax Journal. (Paid) (2023 2024 2025 2026) 2. Associate Editor, Journal of Pension Economics and Finance. (Unpaid) (2023 2024 2025) 3. Senior Editor, Journal of Pension Economics and Finance. (Unpaid) (2026) 4. President and shareholder of KAYEMM CONSULTANCY INCORPORATED, through which some of the above funds have been received. (2023 2024 2025 2026) Disclosure for close relative or partner Married to Sharon Hsueh-Ju Hu since 2019. Additional affiliations: 1. Research Associate, National Bureau of Economic Research. (Unpaid) (2023 2024 2025 2026) Asset disclosure: I and my wife hold shares in companies through broadly-diversified mutual funds and investment vehicles. I do not directly hold shares of any individual corporation (except for KAYEMM CONSULTANCY as noted above). Political activity: I am not a member of any political party at the municipal, provincial, or federal levels. I have occasional policy conversations with policymakers from many parties, as well as government officials at the municipal, provincial, and federal levels. Right to review: None of these organizations had a right to review or edit my published work, except when they acted as the publisher. We thank Leo Ma for excellent research assistance and seminar participants at Carleton, Universidad de Chile, HEC Montreal, University of Illinois, Michigan, MIT, NBER Summer Institute, Northwestern, Queen’s, SOLE meetings, the UBC Stone Breakfast, and the University of Victoria for helpful comments. Timea Molnar provided help with the occupation coding. Baker gratefully acknowledges the research support of a Canada Research Chair at the University of Toronto. Much of the analysis for this paper was conducted at the British Columbia Interuniversity Research Data Centre (SFU and UBC branches), which is part of the Canadian Research Data Centre Network (CRDCN). The services and activities provided by the CRDCN are made possible by the financial or in-kind support of the SSHRC, the CIHR, the CFI, Statistics Canada and participating universities whose support is gratefully acknowledged. The views expressed in this paper do not necessarily represent the CRDCN’s, nor that of its partners, nor that of the National Bureau of Economic Research. This document attempts to disclose completely my potential conflicts of interest, using the guidelines of the American Economic Association. Sources of support: “Each author of a submitted article should identify each interested party from whom he or she has received significant financial support, summing to at least $10,000 in the past three years…” The following corresponds to the calendar years 2023-2026. Below is a complete listing of sources of support that exceed $10,000. For several of these, a grant flowed through a research organization. I have tried to list both the research organization and ultimate source of the funds. 1. University of British Columbia: salary. (2023 2024 2025 2026) 2. Canadian Institutes of Health Research: Insight Development Grant. (2023 2024 2025 2026) 3. Employment and Social Development Canada: personal services agreement for consulting, re microsimulation (2023 2024 2025) Relevant paid or unpaid positions: “Each author should disclose any paid or unpaid positions as officer, director, or board member of relevant non-profit advocacy organizations or profit-making entities.” The following list covers activities in the years 2023-2026: 1. Editor, Canadian Tax Journal. (Paid) (2023 2024 2025 2026) 2. Associate Editor, Journal of Pension Economics and Finance. (Unpaid) (2023 2024 2025) 3. Senior Editor, Journal of Pension Economics and Finance. (Unpaid) (2026) 4. President and shareholder of KAYEMM CONSULTANCY INCORPORATED, through which some of the above funds have been received. (2023 2024 2025 2026) Disclosure for close relative or partner Married to Sharon Hsueh-Ju Hu since 2019. Additional affiliations: 1. Research Associate, National Bureau of Economic Research. (Unpaid) (2023 2024 2025 2026) Asset disclosure: I and my wife hold shares in companies through broadly-diversified mutual funds and investment vehicles. I do not directly hold shares of any individual corporation (except for KAYEMM CONSULTANCY as noted above). Political activity: I am not a member of any political party at the municipal, provincial, or federal levels. I have occasional policy conversations with policymakers from many parties, as well as government officials at the municipal, provincial, and federal levels. Right to review: None of these organizations had a right to review or edit my published work, except when they acted as the publisher. Citation and Citation Data Copy Citation Michael Baker, Jonathan Gruber, and Kevin S. Milligan, "Investing in Mothers? The Long-Run Impact of a Universal Child Care Program on Maternal Work and Income," NBER Working Paper 35514 (2026), https://doi.org/10.3386/w35514. Copy to Clipboard Download Citation MARC RIS BibTeΧ Download Citation Data MARC RIS BibTeΧ Download Citation Data Related Topics Programs More from the NBER In addition to working papers, the NBER disseminates affiliates’ latest findings through a range of free periodicals—the NBER Reporter, the NBER Digest, the Bulletin on Health, the Bulletin on the Economics of Alzheimer's, and the Bulletin on Entrepreneurship—as well as research spotlights, lectures, and panel videos. Feldstein Lecture Presenter: Mark Duggan Methods Lectures Presenters: Melissa Dell & Ashesh Rambachan Video Presenter: Paul Goldsmith-Pinkham