I'm at @FamStudies today explaining why universal childcare programs are a poor policy *even though* childcare costs are indeed a huge problem for families. https://ifstudies.org/blog/why-a-child-allowance-is-preferable-to-subsidized-child-care

My basic argument boils down to the classic economist take:

Just give people cash. In-kind benefits are inefficient for numerous reasons. Cash gives them choices.

But that's a boring take so let's look at the actual arguments!

First of all, credit where credit is due, childcare costs are indeed very high and rising faster than inflation. Parents are consuming more and more in quantity terms of childcare and it's costing them more too.

This is a big problem! I think we should take surveys at face value when parents cite childcare costs as a huge concern and operate on the assumption that if childcare costs were more manageable people would probably be more likely to achieve their family aspirations.

So then we're really discussing a question of efficiency: what's the best way to alleviate the childcare problem?

As I see it, there are three plausible approaches.

1. Massive universal public childcare which commands a de facto monopoly on childcare
2. A mixed market with a public option or subsidy programs
3. Income supports for parents

#2 is basically what we do now. We give a mixed bag of tax-preferred or direct subsidies for childcare and some areas have public options. I think we can all agree this system is actually not great.

Costs spiral, public spending on childcare is captured by firms, and people report the things they report now: extremely burdensome bills.

Doing more of the same, i.e. pumping more money into childcare subsidies or public options, isn't gonna work. It's going to lead to more perverse incentives, middlemen bleeding the taxpayer, and frustrations among parents.

That leaves "Communism for Kids" or "Just Give People Cash" as our options. I don't think a public monopoly on childcare is feasible for many reasons, but religious liberty and federalism are two straightforward problems that would be hard to tackle.

This is particularly the case since membership-based organizations which provide other services could find creative workarounds, and private *schools* could establish pre-pre-pre-K. So unless you are also rewriting the mixed market for education and tackling religious orgs...

I think the monopoly approach is going to end up failing. Also it's extremely expensive: the cost drivers for childcare are as much Baumol as evil corps, and the state is no better at restraining that dynamic than private entities are (perhaps worse!).

So that leaves child allowances. So do child allowances! Yes they might inflate childcare prices some, but many families won't increase their childcare spending in response to child allowances.

In fact, child allowances might cause some families to reduce work commitments for some adults, allowing more at-home caregiving, ultimately *reducing* demand for childcare.

But what I really want to talk about is the fairness issue.

"Who uses childcare" turns out to be super interesting. In the post, I show that children cared for/educated at home overwhelmingly come from *poorer* families.

But it's not just me. Here's a very nice academic paper exploiting quasi-random variation in the rollout of childcare expansions in Germany to show that even when you expand access, it's richer kids who get enrolled! https://www.journals.uchicago.edu/doi/10.1086/699979

The people who respond to expansions in childcare access aren't the people who might benefit from a structured childcare environment.

They're people whose parents have the best outside earning options.

Thing to understand is even with childcare, the outside earning options for a lot of poor people are still not great options, whereas raising your children at home provides many people (especially, according to surveys, lower-income women) a considerable amount of satisfaction.

Once you realize the driving calculation on childcare utilization isn't "Everybody wants to work equally, everybody can work, but the childcare budget is too small" but rather "Balancing desire to be with children vs. Monetary and non-monetary returns of outside option"

You realize that a big reason poorer families don't use *even freely available* childcare is because their outside working options still have pretty low monetary benefits and often VERY low non-monetary returns (i.e. they're not jobs people like).

With this in mind, you realize what public childcare is: a transfer from people with poor work options and strong at-home-care preferences to people with good work options at weaker at-home-care preferences.

Which seems really unfair, to be honest.

It also helps explain why despite enormous survey evidence that childcare is a huge problem for families, academic research has repeatedly turned up very small effects of childcare expansions on fertility: it's a transfer AWAY FROM the most fecund people!

i.e. people who are most likely to derive large hedonic benefits from childbearing

If you want to improve women's labor force participation, improve their job options. Adopt a wage subsidy. Tackle gender- and family-based employment discrimination. Improve job quality.

But don't fuse your family supports and labor force policies.

Support families by giving them direct cash transfers for their children, and support workers by guaranteeing the availability of suitable and well-paying jobs.

Anyways, read the piece. And then tell your Congressman that you want a child allowance.

As an aside, I didn't refer to the Canadian experience, but @FamStudies has run work solid caucus of canucks like @JoshuaTMcCabe and @hamandcheese who have talked a lot about the Canadian reforms. https://twitter.com/JJ_Denhollander/status/1293567506754473984

TL;DR is Canada had exactly this debate with liberals being all "BUT MUH CHILDCARE" and conservatives saying "cash iz good" and then liberals were like "but you can't trust poor people with money they'll buy beer" and conservatives were like "beer iz good" and so they won.

And so Canada adopted a primarilly cash-transfer driven family support system which is by all accounts pretty popular and well-functioning?