The impact of a universal low-fee childcare program on the distribution of income and expenditures within the family: A natural experiment from Canada

The Canadian province of Québec, the second most populous, to increase mother’s participation in the labour market and to enhance child development, implemented in 1997 a $5 per day universal childcare policy. Over time, the age requirement for subsidized spaces progressively decreased and the number of subsidized spaces increased. By September 2000, the low-fee policy applied to all children aged 0 to 4. By March 2012, the number of regulated-subsidized paces reached 225,107, a 211 percentage increase over 1997. In 2008 78% of children aged 1 to 4 were in low-fee childcare. The policy has significantly increased the labour force participation and annual weeks worked of mothers. We use Statistics Canada’s annual 1997 to 2009 Survey on households spending to: a) document the raising share of mothers’ income in total income of households in Québec compared to similar families in the other provinces; b) estimate the impact of the policy (treatment and control groups) based on an IV instrumental technique (generalized method of moments) on expenditures items. The results show that more income in the hands of women impacts on the structure of expenditures within the household, raised budget shares on children and collective family goods and services.