Centre-based versus home-based childcare

Centre-based childcare is seen as a public investment to facilitate maternal employment. Recent theoretical research proposes that such investments potentially lead to substantial gains in child development and thus to high returns for society as a whole. However, the empirical evidence is still scarce and often contradictory. This study is based on rich survey data of a large-scale cohort study of children living in the Netherlands at the beginning of the new millennium. The Netherlands has made substantial investments in the last two decades to make the market of centre-based provisions more professional and far-reaching and to improve children's school readiness. I study the impact of experiencing centre- rather than home-based childcare on language, cognitive and non-cognitive development, assessed at the age of 6. To assess whether very long or intensive childcare spells can be harmful, I account for possible non-linearity in the correlation between the centre-based childcare experience and the child outcomes. As sensitivity analyses, I also apply instrumental variable and structural equation modelling approaches to try to correct for potential biases in my estimates that would result, for example, from unobserved heterogeneity of parents and children. For both ordinary least square estimates as well as the sensitivity analyses the results do not support the significant short-term effects of centre-based childcare stated in the literature.

Keywords: centre-based childcare, non/cognitive and language development, school readiness, non-linear effects, parental choice

JEL: Classification I21, J13, J24