THE ECONOMICS OF CHILDCARE SUBSIDIES

This Photo by Unknown Author is licensed under CC BY-ND

 Childcare Subsidy?

WHAT IS A
Types of Childcare Subsidies
SUBSIDY??

Why are they Important?

 TYPES OF CHILDCARE

Regulated Unregulated
• Must be licensed in Canada • Do not need a license, aren’t
• Must meet regulations to be inspected or monitored
licensed • Parents home or Caregiver’s home
• Example include • Examples include
• Centre-based full-day childcare • Relatives
• Regulated family childcare • Nannies
• School-aged childcare • Sitters
• Nursery schools or preschools
 UNSUBSIDIZED
CHILD CARE COSTS
• What is unsubsidized
childcare?
• Why is Quebec’s cost so low?

Information Retrieved from Statistics Canada (Government of Canada, 2021).

 SUBSIDIZED
CHILD CARE Average Savings Across All Age Groups

SAVINGS
Yukon 77

Saskatchewan 76

Prince Edward Island 69

Ontario 87

Nunavut 84

Nova Scotia 77

Province
• Who Benefits from Northwest Terriitories 79

New Brunswick 74
Subsidized Childcare? Newfoundland and Labrador 74

Manitoba 60

British Columbia 83

Alberta 83
0 10 20 30 40 50 60 70 80 90 100
Average Percent Savings

Information Retrieved from Statistics Canada (Government of Canada, 2021).

 IMPACT OF SUBSIDIES ON THE DEMAND
FOR CHILD CARE

• Increased demand for care

• Market Price stays the same
• Increased Supply of affordable
childcare

Graph adapted using examples from Principles of Microeconomics

textbook (Sayre & Morris, 2021, p. 71).
 IMPACT OF SUBSIDIES ON MOTHERS AND
THE LABOR MARKET

• Increased Availability of Affordable

Childcare  Increase of Mothers in
Labour Market
• Increased Demand For Workers 
Increased Wages

Graph adapted using examples from Principles of Microeconomics

textbook (Sayre & Morris, 2021, p. 71).
 ECONOMIC STIMULATION

• 2017 study by McKinsey & Company

• Increase Canada’s GDP by $150 billion
by 2026 (Fortin et al., 2008)
• Toronto represents 9.5% of Canada’s
GDP
• Toronto  Increase the GDP by $15.8
billion
• (Fortin et al., 2008)
 POVERTY REDUCTION

• Benefits to Parents and Families

• Benefits to the Government
• Benefits to Society
• Statistics from Quebec’s Universal
Childcare
This Photo by Unknown Author is licensed under CC BY-SA
 REFERENCES
Canadian Centre for Policy Alternatives, Macdonald, D., & Friendly, M., In Progress Child Care Fees in Canada 2019 (2020). CCPA. Retrieved November 24, 2021, from
https://www.policyalternatives.ca/sites/default/files/uploads/publications/National%20Office/2020/03/In%20progress_Child%20care%20fees%20in%20Canada%20in%202019_
march1 2.pdf.

Fairholm, R., & Lynell, A. (2017, January). Socio-economic impact analysis of the $10aday child care plan for British Columbia. Centre for Spatial Economics. Retrieved November
24, 2021, from https://d3n8a8pro7vhmx.cloudfront.net/10aday/pages/357/attachments/original/1484678670/10aDay_C4SE_econo mist_report.pdf?1484678670#:~:text=Overall
%2C%20and%20based%20on%20data,for%20other%20provincial%20government%20spending.

Fortin , P., Godbout, L., & St-Cerny, S. (2008). Child care and early education research connections. Impact of Quebec's universal low-fee childcare program on female labour
force participation, domestic income, and government budgets | Research Connections. Retrieved November 26, 2021, from
https://www.researchconnections.org/childcare/resources/23338.

Government of Canada, S. C. (2021, April 7). Survey on early learning and child care arrangements, 2020. The Daily - . Retrieved November 24, 2021, from
https://www150.statcan.gc.ca/n1/daily-quotidien/210407/dq210407b-eng.htm.

Lefebvre, P., & Merrigan, P. (2008). Child‐care policy and the labor supply of mothers with young children: A natural experiment from Canada. Journal of Labor Economics, 26(3),
519–548. https://doi.org/10.1086/587760
 REFERENCES

Lefebvre, P., Merrigan, P., & Verstraete, M. (2009). Dynamic Labour Supply Effects of childcare subsidies: Evidence from a Canadian
natural experiment on low-fee universal child care. Labour Economics, 16(5), 490–502. https://doi.org/10.1016/j.labeco.2009.03.003

Sayre, J. E., & Morris, A. J. (2021). Chapter 2- Demand and Supply: An Introduction. In Principles of microeconomics (10th ed., p.
71). essay, McGraw-Hill Ryerson.

Toronto Children's Services. (2017, September 25). The Economic and Social Impacts of an Accessible, High Quality Child Care
System in Toronto. Retrieved November 24, 2021, from https://www.toronto.ca/legdocs/mmis/2017/ed/bgrd/backgroundfile-
107205.pdf.
Zhang, S., Garner, R., Heidinger, L., & Findlay, L. (2021, July 22). Parents’ use of child care services and differences in use by
mothers’ employment status. Statistics Canada. Retrieved November 26, 2021, from
https://www150.statcan.gc.ca/n1/pub/75-006-x/2021001/article/00007-eng.htm.