Which Children Benefit From Non-Parental Care?

Although the impact of non-parental care on children has been widely analysed, there is still little consensus in the literature. This is due in part to the issue of selection: if families who choose parental care are different from those who opt for non-parental care, the observed association between outcomes and care may not be causal. We address this using four strategies: controlling for a wide array of observable characteristics (including lagged outcomes), using propensity score matching, estimating unobservables bias by looking at selection on observables, and instrumenting use of care with supply-side or demand-side shocks. We find that non-parental care is associated with worse behavioural outcomes, but that the magnitude of the difference is quite small. Moreover, we cannot reject the hypothesis that our effects are solely due to selection. To the extent that we observe differential impacts, the association between non-parental care and behavioural outcomes appears to be more negative in high-SES families, and less negative in day care centres with smaller group sizes (though again, these relationships may not be causal).