Rethinking the Welfare State: The prospects for ... - e-Library

Early childhood education 125
1989 would have had to earn over twice the minimum wage in an employment setting to
attain the level of disposable income available to her if she did no paid work at all, when
all taxes and probable child care expenses are taken into account. 26 In 1998, Gordon
Cleveland and Douglas Hyatt conducted a similar analysis and found that, “Any mother
whose employment earnings are lower than $12,000 per year is worse off when employed
after full child care costs are deducted [than when unemployed]. Even a mother who
earns $20,000 is only better off by $3,000 per year.” 27 If the state generously subsidizes
the child care expenses of those on social assistance, then recipients will experience a
stronger economic incentive to look for work outside the home and increase their longterm
prospects of becoming economically self-sufficient. Moreover, the subsidization of
child care may be an effective means of breaking the chain of intergenerational welfare
dependency by modifying the impressions imparted to children by parental behaviour. “If
children growing up in homes where no parent regularly participates in the labour market
are then themselves less attached to labour markets, a pattern of intergenerational welfare
dependency may emerge.” 28 The converse implication, of course, is that if parents do
engage in the labour market, intergenerational welfare dependency is less likely to
develop.
Externalities
A further rationale for government intervention in the child care arena is based on the
social externalities generated by child care programs. Martha Friendly enumerates a wide
variety of the external public benefits to be derived from effective early childhood
development, 29 including the promotion of equity for children with special needs, the
reduction of poverty, crime prevention, 30 future educational and employment success by
children, social cohesion and the development of a competent citizenry. 31
Despite the demonstrated existence of positive social externalities associated with
child care, it is important to emphasize that these benefits only accompany quality child
care. Low-quality child care has impacts upon children that are as negative as the impacts
of high-quality child care are positive. That is, early care can be as damaging as it can be
ameliorative of the later well-being of children. 32 Some of the indicators of high or low
quality are the age-appropriateness of the programming, care provider/child ratios, staff
wages, work conditions, quality of staff and staff turnover rates. 33 The conclusion that
high-quality care is resource intensive and therefore more expensive (at least in the short
term) to provide than low-quality child care is intuitively unsurprising.
In the presence of positive and negative externalities along the quality continuum, suboptimal
choices are likely to be made by consumers. Because positive externalities result
from high-quality child care, parents (who do not experience the full range of benefits
flowing from quality care, but who do pay the full costs) will under-invest systematically
in quality care. Since negative externalities result from low quality, “warehousing” type
child care, parents (who do not experience the full costs of low-quality care) will overinvest
systematically in low-quality care. These externalities ground at least two cases for
government intervention. The positive externalities associated with quality child care
support a case for the public subsidization of quality child care. The negative externalities
associated with poor-quality child care militate in favour of regulation imposing some
minimum standards on the quality dimensions of child care services.