The Impact of Spending on Early Childhood Education and Care on PISA Scores

This study examines the impact of public spending on Early Childhood Education and Care (ECEC) on age 15 achievement using PISA 2012 data. In order to estimate the causal effect of ECEC spending on student test scores, we follow a cross-country instrumental variable approach. Our identification strategy exploits between country variation in effect of World War 2 (WW2) on female labour force participation. The war had a direct effect on governments’ involvement in childcare as the home front required more women to enter the labour market: the ‘shock’ in female labour force participation during WW2 appears to have generated persistent differences in ECEC coverage and spending. Our results show that ECEC spending significantly improves student achievement in reading but not in mathematics. Moreover, the positive effects are concentrated within boys and within students from families with higher socio-economic status.