Centre for the
Study of Living Standards

Addressing the Early
Childhood Educators
Labour Shortage in Canada:
Challenges, Solutions,and Impacts
Alisaleh Shariati
Centre for the Study of Living Standards
Report prepared for YMCA Canada
May 2024

1

Table of Contents:
56
9Abstract
Executive Summary
Introduction

11
12
16
24

1. Overview of the Canadian Child care Sector
1.1
Structure of the Child care Providers
1.2
Characteristics of the Early Childhood Educators (ECEs)
1.3
Characteristics of ECE Workplaces

32
32
34
39

2. Labour Supply Elasticities of Early Childhood Educators
2.1
Literature review
2.2
Quantitative Estimates of the Increased Supply of ECEs
2.3
Potential Sources of Additional Qualified ECEs and Limitations		
to Increasing the Labour Supply

42
42
43

62
64

3. Social Benefits and Returns to Investment
3.1
Maternal labour supply
3.1.1 Lessons from Quebec Universal Child Care Reform and		
the Maternal of Labour Supply Response
3.1.2 Extrapolation of Quebec Reform Results to the		Canadian Context
3.1.3 Estimation of Maternal Labour Supply Based on Projected		Space Availability and the Current Potential Demand for		Child Care Spaces in Canada
3.1.4 Estimation of Revenue and Cost of the proposal
3.2
Short-run and Long-run Effects on Children Development,		
Human Capital Formation and Later Life Outcomes
3.3
Quality of Care
3.4
Fertility and Birth Rates

65

4. Conclusion

68

References

76

Appendix A: Comprehensive Literature Review of the Labour
Supply Elasticity of ECEs

81

Appendix B: International Evidence on the Labour Supply Responseof Mothers to Child Care Coverage Expansion

83

Appendix C: Child Care Providers Data at the Provincial level

45
52

55
58

2

3

Addressing the Early Childhood
Educators Labour Shortage in Canada:
Challenges, Solutions, and Impacts

Abstract
The Canada-wide early learning and child care program
may not successfully provide the additional 250,000 childcare spaces by 2026 as envisioned in Budget 2021. A key
reason for this is the lack of qualified Early Childhood
Educators (ECEs) needed to staff these additional spaces.
This shortage is partly due to the low wages in this occupation.
This report investigates a proposal for an across-the-board
25 per cent wage increase for qualified ECEs. It finds that this
proposed wage increase would be sufficient to attract thenecessary number of ECEs to support the expansion of thechild care system in Canada. However, other considerations
such as investment in physical capacity and training for thechild care workforce would also be needed for expansion.
The report also reviews the social benefits of the expanded
child care network. It projects that with the estimated costof $1.2 billion needed to raise ECE wages by 25 per cent,investment in higher ECE wages would have a benefits-to-cost
ratio between 1.88 and 2.06, due to the economic benefits
it generates. Lastly, the report discusses the potential long-term
effects of this expansion of the child care system on children’sdevelopment, quality of care, and fertility rates.

45

Executive Summary
Canada, like other industrialized economies, has taken steps to increase the availability ofchild care services. The most notable recent initiative is the introduction of the Canada-wide
Early Learning and Child Care (CWELCC) framework in 2021 by the federal government.
This ambitious five-year program aims to reduce fees to an average of $10 per day forchildren under the age of six in licensed child care by March 2026 and to create 250,000
new child care spaces. However, despite an allocation of over $30 billion in public investment
over five years, the federal child care program is encountering numerous challenges.
One of the most significant is the difficulty many child care centres face in attracting andretaining a sufficient number of qualified Early Childhood Educators (ECEs), a situation thatwas exacerbated by the Covid pandemic. In fact, employment in child care dropped by
21 per cent during the pandemic, compared to 3 per cent among other workers (Uppal andSavage 2021).
The labor shortage in the sector and the expansion of spaces envisioned in the CWELCC
program are certainly at odds. To address this problem, child care advocates have beencalling for additional funding aimed at enhancing the pay, benefits, and working conditionsof ECEs. In particular, the YMCA, the largest not-for-profit child care operator in Canada,
has expressed interest in examining a proposal for an across-the-board 25 per cent increasein wages for qualified ECEs. The estimated cost of this wage increase is around $1.2 billion.
The Centre for the Study of Living Standards (CSLS) has conducted this report to shed lighton the effectiveness of this proposal, and to measure its effectiveness in staffing the intended
number of spaces within the CWELCC plans and to analyze its broader economic impacts.
The report begins with a comprehensive overview of the state of the child care sector
in Canada, with a particular focus on its workforce. As of 2021, 252,645 individuals were
employed in child care, with 207,830 (82.2 per cent) being ECEs and 44,815 (17.8 per cent)home child care providers, together representing 1.2 per cent of the entire labour force.
The report highlights a more than 100 per cent increase in the number of quarterly job
vacancies for ECEs from the second quarter of 2021 to the second quarter of 2022. It also
notes that wages for ECEs have remained stagnant in real terms during this time. Moreover,the median hourly wage for ECEs at $21 per hour is significantly lower than wages forworkers in occupations requiring similar levels of education and qualifications, or thosein comparable fields of education, such as kindergarten teachers.
The report then applies the estimates from the economic literature on the labour supply
elasticity of ECEs and concludes that the proposed wage increase could attract between
58,192 and 103,746 additional ECEs, assuming they work the current average number ofhours. This increase would come from attracting new ECEs (new graduates or workers
from other sectors), reducing the number of ECEs leaving the sector, and increasing the6

work hours of existing ECEs. Even with a conservative child-to-staff ratio of 6, this increase
in ECEs’ pay would suffice to staff the 250,000 additional spaces. However, the report also
notes operational and logistical constraints, particularly the capacity of post-secondary
education systems to graduate enough qualified ECEs to support the creation of thesespaces. It estimates that it will take at least four years for universities and colleges in Canada
to graduate the required number of ECEs for the expansion of the child care spaces.
The report further reviews Quebec’s experience with universal child care following theimplementation of a low-fee publicly funded system in September 1997, especially its
impact on the labour force participation of mothers. Extrapolating from previous studies,
the report estimates that if Canada mirrors Quebec’s experience, maternal labour force
participation could increase by 8.40 percentage points over five years, generating
approximately $2.48 billion per year in economic benefits as measured by an increasein Gross Domestic Product (GDP). An alternative estimation method based on the current
potential demand for child care services in Canada which accounts for the crowding out
of informal care associated with the introduction of universal child care programs, yields
an increase in maternal labour force participation of 7.54 percentage points over five years,
contributing $2.25 billion per year to the Canadian GDP in that time frame.
Since these economic benefits can only materialize if the regulated child care spaces
created are adequately staffed and given the estimated price tag of 1.2 billion dollars tofund the higher ECE wages, the estimated benefit-to-cost ratio is between 1.88 to 2.06.
This means that for every dollar spent on increasing the ECE wages, 1.88 to 2.06 dollars
worth of economic benefits would be generated for the Canadian economy.
The study concludes with a qualitative assessment of other social benefits attributed toincreasing the wages of ECEs and expanding the coverage of the universal low-fee childcare system at the national level. It reviews international and Canadian evidence regarding
the effects of universal child care programs on children’s development, human capitalformation, and later life outcomes; quality of care; and fertility and birth rates. The findings
suggest that a well-implemented universal child care program can lead to improvements inchild development and life outcomes, especially for children from disadvantaged
backgrounds. However, without adequate funding and staffing, the efficacy of the child careprogram could be severely undermined, potentially leading to adverse outcomes for children.
Moreover, the study finds that sufficient staffing and improved working conditions for ECEs
can enhance the quality of care provided to children. Finally, the review does not finda strong relationship between universally accessible child care spaces and fertility rates.

7

Introduction

Summary of Key Assumptions and Results

Assumptions
ECE Wage Increase

25 per cent

Cost of Funding theWage Increase$1.2 billion

Number of Additional
Spaces Created250,000 formal child care spaces at
not-for-profit child care centres

ECE Labour Supply Elasticity

1.15 (Conservative) and 2 (Baseline)

Average Number of
New ECE Graduates

6,350

Maternal Labour Supply
Response Channel

Only the extensive margin (Decision to work)

Child-to-Staff Ratio

6 (Conservative) for children 0 to 5 years oldChild-to-Mother Ratio

1.33 (National fertility rate)

Source of Benefits

Only limited to the expansion of centre-basedchild care centres

Type of Benefits

Economic benefits (GDP)Results
ECE Labour Supply Response

58,192 ECEs(Low estimate)
103,746 ECEs (Baseline estimate)

ECE Retention Response

5,632 ECEs

Years Needed to Train New ECEs

4

Maternal Labour Supply Response

7.54 to 8.40 Percentage Points (Over five years)
Annual Average increase of 1.51 to 1.68 pp

Economic Benefits$2.25 to $2.48 billion per year

Benefit-to-Cost Ratio

1.88 to 2.06

Source: CSLS calculations.

8

Access to quality child care services has been at the forefront of policy discussions in many
advanced economies in recent years. This is partly because the availability of Early Childhood
Education and Care (ECEC) aids mothers in achieving the work-life balance to better manage
their careers and household responsibilities. Beyond supporting the involvement of mothersin the labour market, high-quality ECEC is linked to positive outcomes in child development
and learning, crime reduction, enhanced equal opportunities, and diminished poverty.
Consequently, ECEC stands as a vital instrument for promoting various objectives in family,
child, and gender equality policies.1
In Canada, the federal government in its April 2021 budget (Department of Finance, 2021)
has committed to a Canada-wide Early Learning and Child Care (CWELCC) system with theparticipation of various provinces, territories, and Indigenous partners. The stated goal ofthis initiative is to add 250,000 new child care spaces across Canada by March 2026 and toincrease the affordability of child care services by providing them at an average parental
fee of $10 per day for each child under the age of six by 2026.2
To understand the significance of the proposed reduction in costs, it is worth noting thatin early 2022, the mean parental child care expenses were about $31 per day per child forchildren in a daycare centre, preschool or child care centre (including centre de la petite
enfance). This represents a $7,790 expenditure per year for the main full-time (30 or more
hours per week) child care arrangement ($9,616 excluding Quebec) for their 0-to-5-yearold children3 (Statistics Canada, 2023a). Such drastic cost reduction and expansion of theavailability of ECEC services is only made possible by considerable increase in federal andprovincial governments funding of the ECEC sector. As announced in the 2021 federal
budget, the federal government plans to spend $30 billion over five years on early learningand child care. Given this very high price tag, an objective analysis of the broad set ofsocial and economic impacts of this policy proposal is of paramount importance. While allprovinces and territories have signed agreements with the federal government to participate
in CWELCC, many child care operators, a large portion of them being not-for-profit,4 haveexpressed concerns about the program’s implementation. Child care advocates specificallyworry that the intended increase in the supply of affordable licenced child care services

This report was prepared and written by Alisaleh Shariati, an economist at the Centre for the Study of Living
Standards (CSLS) under the supervision of Andrew Sharpe, the executive director of the CSLS, at the requestof YMCA Canada. We are grateful for the constructive comments from Gordon Cleveland, Linda Cottes,
Peter Dinsdale, Don Drummond, Peter Fortin, David Macdonald, Jessica Lue, Tim Sargent, and Jen Turner.
2
For more detailed information about the agreements between the federal and provincial governments see:https://www.canada.ca/en/early-learning-child-care-agreement/agreements-provinces-territories.html.
3
There is a considerable difference in the cost of child care depending on the type of arrangement. For example,
in 2022 child care cost for a 0- to 5-year-old child in a full-time child care centre was an average of $31 per day($7,957 per year), $29 ($7,042 per year) per day for full-time child care in a family child care home, and $106 per
day for full-time care by a non-relative in the child’s home (Statistics Canada, 2023a).
4
As of 2023, about 40 per cent of child care centres in Canada were not-for-profit organizations (Statistics
Canada, 2022).
1

9

cannot be achieved unless compensation levels of ECEs are increased significantly.
The YMCA, the largest not-for-profit child care provider in Canada, has advocated for
a comprehensive approach aimed at enhancing support for the early childhood educators
as an essential step toward meeting the CWELCC goals.5 Child care activists believe thatthe considerable waitlists for child care spaces that currently exist call for more investment
in infrastructure (i.e. land and buildings needed for creating more spaces) and physicalcapital (i.e. tools and supplies needed for the operations of the child care centres) as well.
This study takes a narrow focus on one aspect of the ECE workforce support package
and answers two specific questions:
1-1

How does a 25 per cent increase in ECE wages impact recruitment andretention of ECEs?6

2-2

If wages of fully qualified ECEs increased by 25 per cent compared to what
they are today, what would be the return on the investment at an economic level?

By addressing these questions, the study contributes to understanding the aspects of the
CWELCC rollout that will be crucial in its success. The analysis provided in this report is basedon using the findings of the ECEC literature in Canada and globally to provide estimates forthe labour supply elasticities (both recruitment and retention) of ECEs in response to the
proposed 25 per cent increase in the wages of fully qualified ECEs.
Section 1 provides an overview of the current state of the Canadian child care sector.
We review the structure of the child care providers, the characteristics of the ECEs andthe characteristics of child care centres in Canada. Section 2 investigates the labour
supply elasticities of early child care educators (ECEs) and the factors influencing them.
To that aim, we review the literature on the labour supply elasticities of ECEs with respect
to wages to find plausible estimates for these elasticities. We then use these elasticities toestimate the increased supply of ECEs in response to a 25 per cent wage increase anddiscuss the potential sources of this additional supply. Section 3 sheds light on potentialsocial benefits and returns to investment attributable to raising ECE wages. The report
restricts attention to the economic benefits of the increase in maternal labour supply
that may be attributable to the expansion of child care spaces and provides a qualitative
assessment of additional potential benefits to children’s development, human capitalformation and later life outcomes, improvements in quality of child care and increasein fertility. Section 4 concludes.

1 | Overview of the Canadian Child Care Sector
In this section, we portray a broad picture of the ECEC sector that will primarily concentrateon the supply of child care and its defining characteristics in the Canadian context. Special
attention will be given to the following:
1)
1
		
2)
2
		
		
33)
		
		
		

Structure of child care providers (for-profit versus not-for-profit, size distributionof centres, regional differences.)
Characteristics of ECEs including gender composition, age, educational andprofessional qualifications, years of experience, full-time versus part-time andaverage weekly hours.
Characteristics of ECE workplaces such as wages and non-wage benefits, typesof centres (unionized versus non-unionized, subsidized versus non-subsidized,
ratio of children to ECEs, job vacancies, length of wait lists for spaces, retention
rates and physical capacity to increase the number of child care spots or spaces).

For added clarity and to distinguish between the ECE occupation and the ECEC sector,
we briefly discuss some definitions here.
In this report, ECE represents NOC (National Occupation Category) code 42202 “Early
childhood educators and assistants”. As such, both educators and assistants are referred
to as ECE. Home child care providers (NOC 44100) is a separate category and refers to
those who provide care primarily in their own homes or in the children’s homes, where
they may also reside. They are employed by private households and child care agencies,or they may be self-employed.
The ECEC sector corresponds to NAICS (North American Industry Classification System)2017 code 624410 “Child day-care services” and excludes those providing babysitting or
nanny services (included in NAICS code 814110 “Private households”) and those providing
kindergarten education (included in NAICS code 611110 Elementary and secondary schools).
In addition, we will refer to “Family child care home” and other similar names for family-run
child care in a home setting (which can be regulated or unregulated) as “Home-based care”.
To distinguish this arrangement from the care provided by a child care provider at the child’s
home (e.g. child care by a nanny) we will use the term “At-home care”. Home child careproviders (NOC 44100) includes both home-based care and at-home care providers.

For more details see the report “An Investment that Works for Child Care Expanding the child care workforce
nationwide” available at: https://ppforum.ca/publications/an-investment-that-works-for-child-care/
6
The idea of raising ECE wages by 25 per cent was first explored by Gordan Cleveland in the article titled “How
Much Will It Cost To Raise The Wages Of Early Childhood Educators?” available at https://childcarepolicy.net/
how-much-will-it-cost-to-raise-the-wages-of-early-childhood-educators/
5

10

11

1.1 | Structure of Child Care Providers
In this subsection, we first take a close look at the different types of child care providers
and provide a detailed breakdown of the types of child care centres and home-based
centres that serve children between 0-to-5-years old in Canada. We then focus on the
distribution of centres across provinces. Finally, we highlight some of the main characteristics
of child care centres in Canada. In Appendix C, we provide a historical perspective on theevolution of child care spaces at child care centres and regulated home-based centres aswell as the share of for-profit spaces at the provincial level.

A recent report by Charters and Findlay (2023), using the Canadian Survey on the Provisionof Child Care Services (CSPCCS), the first Canada-wide survey that describes the provisionof child care services in detail, has found that child care centres made up only about
31 per cent of the total of 45,366 businesses providing child care to children aged 0 to 5
years old in the country. Around 33 per cent of the businesses were home-based settings
operating with a licence and the remaining 36 per cent were ones without a licence.
Focusing on centre-based child care and using CSPCCS, the results obtained by Chartersand Findlay (2023) indicate that there were 12,664 regulated child care centres (formal)
across Canada providing care to children aged 0 to 5 years as of April 2022. Additionally,
almost half of the child care centres were not-for-profit or publicly operated. In thiscontext, public child care centres include those operated by a government body, such asa municipality or school board, and private child care includes not-for-profit, charitable,or cooperative types of organizations and for-profit service providers. Figure 1 illustrates
the breakdown of child care businesses by type. As of 2022, there were about 6,306 notfor-profit and government-operated child care centres in Canada. Nearly 91 per cent ofthese centres were licenced.8

Chart 1: Type of Child Care Arrangement in Canada, Excluding Parental Care,Per cent of Total Children Aged 0 to 5 years, 2019 and 2023

2019

2023
Centre-based child care1

Care by a relative other than parent or guardian1
Care by a non-relative in the child’s home1Home-based child care1
Before- or after-school program
Other child care arrangements

0

10

20

According to Statistics Canada data7 34.3 per cent of children between the ages of 0 and 5
were enrolled in centre-based child care spaces in 2023, making this the most common
type of child care arrangement for young children in Canada (excluding the care provided
by parents). As Chart 1 illustrates, other popular forms of child care arrangements include
care by relatives other than a parent or guardian (11.7 per cent) and home-based child care
(9 per cent). The interesting pattern that one can observe is the decline in all care arrangements
except for centre-based child care between 2019 and 2023. In fact, the number of children
enrolled in child care centres has risen by 3.3 percentage points, while care by a nonrelative in the child’s home and home-based care have fallen by 0.9 and 3.2 percentage
points, respectively.

30

40

%

Studies such as Cleveland et al. (2007), Huntsman (2008) and Doherty et al. (2002) havefound that not-for-profit centres tend to put more emphasis on hiring more qualified staff,
reducing turnover and increasing job satisfaction and professional development opportunities
for their staff.

Note: 1 represents a significant change from 2019 to 2023. The Shares do not add up to 100 per cent as childrenthat are taken care of by their parents are excluded.
Source: Statistics Canada- Table 42-10-0031-01

Statistics Canada. Table 42-10-0031-01 Type of child care arrangement, children aged 0 to 5 years.
1.8 per cent were unlicensed and 7.6 gave “not sure” as a response (Source: Statistics Canada, Canadian
Survey on the Provision of Child Care Services, 2022)
7

8

12

13

offered full-time care, two in three offered part-time care, and one in three offered
before- or after-school care. Only 16 per cent of centres offered drop-in or flexible care
and a mere 2 per cent provided care during evenings, on weekends or overnight.

Figure 1: Child Care Businesses in Canada by Type, 2022

Child Care
Businesses

45,466

Child Care
Centres

Home-Based
Centres

12,66432,702Centres that offered full-time care enrolled, on average, 51 children on a full-time basis andcentres offering part-time services enrolled 21 children on a part-time basis. 43 per cent (lessthan half) of centres accommodated at least one child with a disability and 85 per cent served
at least one child who was benefiting from a fee subsidy. Within centres that offered full-timecare, daily fees (including subsidies) in Canada excluding Quebec were highest for infants($52.10) and lowest for school-aged children who would typically enroll in before-and-after
school programs ($30.80).10

Chart 2: The Regional Distribution of Child Care Centres, April 2022
Number of centres

Privatenot-for-profit
orgovernmentoperated

Privatefor-profit

5,901

Licenced

Non-Licenced

15,697

17,005

6,306

4,000
3,378

3,581

3,000
2,060

2,000
Note: The number of sub-categories for child care centres (Private not-for-profit vs. Private for-profit) andhome-based centres (Licenced vs. Non-Licenced) does not add up to the total number of child care centres
and home-based centres. The reason is that some centres gave “Don’t know” or “Not sure” as an answer tothe type of business arrangement they had.
Source: Data provided in Charters and Findlay (Parent Source: Statistics Canada, Canadian Survey on theProvision of Child Care Services, 2022)

1,000

0

Chart 2 provides the distribution of the child care centres at the provincial level in 2022.
Unsurprisingly, most of these centres are in the provinces with the largest number ofchildren, namely, Ontario and Quebec.9

1,640

116

81

N.L.

P.E.I.

266

332

N.S.

N.B.

589

Que.

Ont.

Man.

356
Sask.

68
Alta.

B.C.

Territories

Source: Charters and Findlay (2023)-Chart 1 (Parent source: Statistics Canada, the Canadian Survey
on the Provision of Child Care Services)

Table 1 provides the breakdown of regulated child care centres in terms of children’s age
categories they serve, their licensing status, services provided and the average (mean)
number of children in full-time and part-time centres. About 90 per cent of these centres

831,185 children aged 0 to 5 in Ontario and 515,725 in Quebec. (Source: Statistics Canada.
Table 42-10-0012-01 Number of children in Canada).
914

Infants are considered children younger than 1, toddlers between 1 to 3 and preschool children are
3 to 5 years old.
1015

1.2 | Characteristics of the Early Childhood Educators (ECEs)
According to the 2021 Canadian Census of Population, of the 252,645 individuals employedin the child care, 207,830 (or 82.2 per cent) were early childhood educators and assistants
and 44,815 (or 17.8 per cent) were home child care providers. As of 2021, child care sector
represented 1.2 per cent of the entire labour force. Table 2 depicts the number of persons
employed in the child care sector within each province and the breakdown for ECEs andhome child care providers. The absolute and relative number (to other provinces) of the
ECEs in Quebec stands out. In fact, Quebec had the highest number of persons employedin child care overall and hired the highest number of ECEs. Notably, 95 per cent of allchild care workers in Quebec were ECEs.
Chart 3 illustrates the relative share of child care workforce to the total employed
population, by province or territory, as of 2021. In this regard, Quebec has the largest
share of persons employed in child care relative to total employment, most of which are
ECEs. Highly populated provinces such as Ontario and British Columbia have lower sharesof child care-to-total employment ratios compared to provinces with smaller populations.
Table 1: Characteristics of Child Care Centres Serving Children Aged 0 to 5 years in Canada,
April 2022
Count (Canada)

12,466Per cent of Centres

Centre Characteristics

Infants (alternative: no infants enrolled)
Toddlers (alternative: no toddlers enrolled)
Preschool-aged children (alternative: no preschool-aged children enrolled)
School-aged children (alternative: no school-aged children enrolled)

54.1
72.5
91.4
39.3

Licensed by Child care Authorities (proportion)
90.6
1.8E
7.6

Auspice (proportion)
Private not-for-profit or government-operated
Private for-profit
Don’t know

Options offered at centre (proportion)
Full-time (alt: does not offer this option)
Part-time (alt: does not offer this option)
Before-or-after school (alt: does not offer this option)
Evenings, weekends or overnight (alt: does not offer this option)
Drop-in or flexible (alt: does not offer this option)

87.8
66.2
36.8
1.7
15.8

Centre Offers Part-time Care Only (proportion)
Part-time only
Other options offered

1090

Enrolment
Number of Children Enrolled in Centre Full-time (mean)
All age groups

51.4

Number of Children Enrolled in Centre Part-time (mean)
All age groups

20.6

Children Enrolled with Disability (proportion)
Any enrolment
No enrolment

43.4
56.6

Children Enrolled with Fee Subsidy (proportion)

Provides Care to Groups in Age Categories (proportion)

Licensed
Not licensed
Not sureServices Provided

49.8
46.6
3.6

Any enrolment
No enrolment
Don’t know

85.2
12.9
1.9E

Average Full-time Daily fee ($) Charged per child (mean)
Infants
Toddlers
Preschool-aged children
School-aged children

52.1
51
43.7
30.8

Note: E represents use with caution. Number of children enrolled in centre full-time and part-time representmeans in centres with non-zero counts for children enrolled on a given full- or part-time basis. Average daily
fees are calculated only in centres offering the full-time child care option. Excluding Quebec. All other care
options may include full-time care only, full- and part-time care, and other care options not including partor full-time care. Average full-time daily fee ($) charged per child Excludes Quebec from the sample.
Source: Charters and Findlay (2023)- Table 1

continued on next page…
16

17

Table 2: The Distribution of Persons Employed in the Child Care Sector,
by Province or Territory, 2021
Total
Employed
Population

All Persons
Employed inChild care

Early childhood
educators andassistants (ECEs)

Home Child
Care Providers

Canada252,645

207,830

44,815

18,613,000

Newfoundlandand Labrador

2,255

1,800

455

219,800

Prince Edward
Island

1,155

965

190

79,200Nova Scotia

5,100

4,205

895

448,200

New Brunswick

5,090

4,215

875

364,000

Quebec92,13587,5854,550

4,227,200

Ontario

77,99059,53518,455

7,190,000

Manitoba

8,950

7,480

1,470

654,000

Saskatchewan

7,140

5,060

2,080

562,000

Alberta

24,815

15,8708,945

2,236,000

British Columbia

27,20020,445

6,755

2,634,000

Yukon

330

305

25

22,100

Northwest
Territories

290

215

75

23,500

Nunavut

195

155

40

12,600RegionSources: Early Learning and Child Care Information Hub: Statistics Canada, Statistics Canada. Table 14-100292-01 Labour force characteristics by territory, three-month moving average, seasonally adjusted andunadjusted, last 5 months, and Statistics Canada. Table 14-10-0287-03 Labour force characteristics byprovince, monthly, seasonally adjusted.

As Uppal and Savage (2021) report, in 2016, the child care workforce consisting of ECEs,
and home child care providers were among the top five of all occupations with the highest
proportion of women, each at 96 per cent. The high proportion of women employed in
the child care sector has changed little since 1991, when 96 per cent of early childhood
educators and assistants and 97 per cent of home child care providers were women.
In addition, ECEs and home providers are both more likely to be younger than workers inother sectors. As Table 3 suggests, as of 2016, 64 per cent were in the 15 to 44 age category.
This is almost 9 percentage points higher than the comparable statistics belonging toworkers in other sectors (55 per cent) in the same age group.
Chart 3: Relative Share of Persons Employed in Child Care to the Total Employed
Population, 2021

Source: Table 2

Almost 71 percent of the child care workforce had postsecondary education in 2016, with
79 per cent of ECEs having education attainment levels above a high school diploma relative
to the 53 per cent of home child care providers. Uppal and Savage (2021) mention that there
has been a significant rise in the proportion of persons employed in the child care sector witha postsecondary education between 1991 and 2016 (from 41 per cent to 71 per cent).

18

19

The minimum educational requirements needed to qualify as a child care educator havechanged in recent decades. While there are no educational requirements for home child careproviders, ECEs employed in regulated child care centres are subject to such requirementsthat vary by province. In Appendix C, Table 1C, we provide the details of these educational
requirements for each province. Many provinces require a one-year or two-year college
diploma or certificate for ECE qualifications at the individual (educator and staff) levels, withsome also regulating the qualifications and composition of educators at the program level.

Highest certificate, diploma
or degree

years

No certificate, diploma or degree

5.4

13.8

8

10.1

Secondary (high) school diploma
or equivalency certificate

15.6

33.2

21

25.4

Apprenticeship or trades certificate
or diploma

7.7

5.7

7.1

10.6

College, CEGEP or other nonuniversity certificate or diploma

47.3

23.4

40

22.2

For instance, in Ontario child care centres, one-third of the staff with an infant group ora toddler group are required to possess a two-year early childhood education (ECE) diploma
and two-thirds of staff with a preschool-age group must have a two-year ECE diploma.

University certificate or diploma
below bachelor level

5

4.2

4.7

3

University certificate, diploma or
degree at bachelor level or above

19

19.7

19.2

28.7

Uppal and Savage (2021) report that in 2016, 77 per cent of ECEs in Quebec and 84 per centin Ontario had a postsecondary education. The province with the highest proportion of earlychildhood educators and assistants with a postsecondary education was Prince Edward Island,
at 86 per cent.

Immigrant status

67.3
28.7
4

74.9
23.8
1.3

As data in Table 3 illustrates immigrants and visible minorities are more likely to be ECEs andhome child care providers than be employed in other sectors. The same could be said about
Indigenous persons whose share of the ECE workforce is 4.9 per cent while their share of theoverall workforce is about 4.1 per cent. Child care staff are also more likely to have children(especially children older than six) compared to workers in other sectors.
Table 3: The Distribution of Persons Employed in Child Care, by Province or Territory, 2016

Characteristic

Early childhood
educators
andassistants

Sex
Women
Men

Home
child careproviders

96.4
3.6

96
4

Age group
15 to 24 years
25 to 34 years
35 to 44 years
45 to 54 years
55 to 64 years
65 years and older

All other
workers

96.3
3.7

47.4
52.6

39.9

42.7

12.2
24.4
27
21.3
12.5
2.7

12.7
20.9
21.3
23.4
17.2
4.5

years
39.4

41
Per cent

12.3
25.7
27.3
21.9
11.3
1.6

11.9
21.4
26.3
20.1
15.2
5.1

72.4
26.6
1

No children
Youngest child is younger
than 2 years
Youngest child is 2 to 5 years
Youngest child is 6 to 14 years
Youngest child is 15 to 24 years
Youngest child is 25 years
or olderTotal visible minority population
South Asian
ChineseBlack
Filipino
Latin American
Arab
Southeast AsianWest Asian
KoreanJapanese
Visible minority, n.i.e
Multiple visible minorities
Not a visible minority

41.3
7

52.9
5.1

44.9
6.4

56.6
5.5

12.5
21.6
14.6
2.9

10.6
16.1
11.2
3.9

11.9
19.9
13.6
3.3

8
13.9
12.5
3.4

28.4
5.1
2.5
4.3
7.9
2.4
2.9
0.7
0.9
0.5
0.2
0.4
0.5
71.6

21.2
5.4
4.3
3.1
2.6
1.4
1.1
0.9
0.7
0.5
0.3
0.4
0.6
78.8

4.8
2.7
1.6
0.3
0.1

4.1
2.1
1.7
0.2
0.1

Per cent
23.7
5.2
2.4
4.8
2.1
2.5
3.7
0.4
1
0.7
0.2
0.5
0.4
76.3

Indigenous status
Total IndigenousFirst Nations
Metis
Inuit
Other or multiple indigenous status

55.9
33.4
10.7
Per cent

Presence of children

Visible minority

Per cent

Age
Median age

Total,
child care
workers

Non-immigrant
Immigrant
Non-permanent resident

Per cent

39
4.9
2.9
3.1
21.1
2.2
1.2
1.3
0.7
0.2
0.3
0.4
0.7
61
Per cent

4.9
3.0
1.5
0.4
0.1

4.5
2.3
1.5
0.3
0.1

continued on next page…
20

Source: Uppal and Savage (2021)- Table 2 (Parent Source: Statistics Canada, Census of Population, 2016);
Frank and Arim (2021)- Table 12 (Parent Source: Statistics Canada, Census of Population, 2016)21

Switching to the economic landscape of the ECE workforce, and using the estimates provided
by Statistics Canada (2022a), Table 4 showcases the economic characteristics of ECEC workforce.
The economic characteristics are class of worker, full-time work status and employment income.
The class of worker represents paid employee vs self-employed status during the census reference
week. Full-time work status identifies whether a person worked mostly full time (30 hours ormore per week) or part time (less than 30 hours per week) during the reference week.
Table 4: Economic Characteristics of Persons Employed in the Early Learning Child
Care Sector, in 2016
Characteristics

Total,
Child care
workers

Early childhood
educators andassistants

Class of worker
Paid employee
Self-employedHome Childcare
providersOther
workers(less than $20,000 in annual income) and more likely to be a member of a low-income family
than both ECEs and non-child care workers.
Table 5 sheds light on the employment and earnings situation of the ECEs and home careproviders relative to other workers.
In 2015, across Canada, ECEs annual mean employment income was less than half of the meanof all other workers ($26,800 vs. $53,800 on an annual basis). Within the child care sector,
the earnings of home child care providers ($17,300) were notably lower than those of ECEs($26,800). In terms of variation among provinces, the territories had the highest earnings to
the ECEs, and the lowest average earnings belonged to Atlantic Canada.
Chart 4 provides a relative comparison of job tenure, defined as the number of consecutive
months that a person has worked in their current job, between the educators and child careproviders and the workers in other sectors from 1997 to 2019.

Per cent
78.2
21.8

84.8
15.2

63.5
36.5

87.9
12.2

73.3
26.7

74.2
25.8

71.3
28.7

78.5
21.5

Table 5: Average Employment Income among Persons Employed in the Child Care Sector
and all other workers, 2015

Weekly work hours
Full-time (>30 hours)
Part-time (<30 hours)
Employment income
in 2015< $20,000$20,000-$39,999$40,000-$59,999$60,000 or more
Member of lowincome family

EarlychildhoodeducatorsHome
child careproviders

All other
workers

dollars

47.8
39.3
10.9
2.1

38.2
44.9
14.4
2.6

69.2
26.7
3.1
1

28.6
22.2
18.9
30.3

12.2

7.8

22

7.9

Note: All results weighted with census sample weights.
Source: Statistics Canada (2022b)- Table 2 (Parent Source: Census of Population, 2016)

Employment income captures wages and salaries for paid employees and reported net income
for the unincorporated self-employed as of 2015. Lastly, the ECEs poverty rate was determinedbased on whether the person was a member of a low-income family according to the Market
Basket Measure.
The ECE workforce was less likely to be a paid employee, compared to workers in other sectors.
They were also more likely to have an annual income lower than $60,000 per year.
ECEs and especially home child care providers were relatively more self-employed and worked
fewer hours (as measured by the ratio of full-time and part-time workers) relative to non-childcare workers. Home child care providers were much more over-represented in lower pay scales
22

RegionAll child care
workers

CanadaAtlantic
QuebecOntario
Manitoba
Saskatchewan
Alberta
British Columbia
Territories

24,10019,80025,40024,60022,90021,00023,40022,00029,40026,80023,00026,20028,50025,50024,80027,80025,20032,600

Ratio of average childcare employment
income to all otheroccupations
per cent

17,30013,80017,90017,10016,50016,30019,10016,90020,80053,80047,60047,10055,50048,90054,30067,40051,40069,200

44.8
41.6
53.9
44.3
46.8
38.7
34.7
42.8
42.5

Note: This table includes only those who worked in 2015 with an employment income greater than zero.
Source: Uppal and Savage (2021)- Table 3 (Parent Source: Census of Population, 2016)

Notice that this chart includes both ECEs and home child care providers. There has beena narrowing gap in terms of job tenure between child care providers (ECES and home careproviders) and the rest of the workforce. The former group increased its average tenure from
44 months in 1997 to 84 months in 2019 while the latter group had a relatively stable average
at around 100 months. This considerable increase in the tenure of child care educators andhome child care providers is an interesting observation and could be due to a multitude offactors including the universal child care program introduced in Quebec in 1997 whichcaused an increase in demand for full-time employees in the sector (especially for ECEs).

23

Chart 4: Average Number of Months in Current Job, 1997-2019

supply that occurred post-pandemic. This is further supported by the evidence presented
in Chart 6. While the average offered wage for the ECEs did experience an upward trend
after the pandemic (especially for full-time ECEs), the relative increase (in percentage terms)
is not as significant as the increase in vacancies. Simply put, while child care centres needed
to hire more ECEs, they were not able or willing to raise the offered wage to attract enougheducators. In fact, as Table 8 suggests, in the aftermath of the COVID-19 pandemic,
62 per cent of child care centres reported difficulty hiring and retaining qualified ECEs
(the second most significant source of difficulty for child care centres).
Table 6: Staff, Qualifications and Pay Characteristics of Child Care Centres’ Employees,
Canada, April 2022
Staff, Qualifications and Pay
Average number of employees providing direct care to children full-time per centre
9.7

All age groups

Average number of employees providing direct care to children part-time per centre
Note: “Child care workers” refers to both Educators and home child care providers (Home-based child care
and at-home child care)
Source: Uppal and Savage (2021)- Chart 5 (Parent source: Labour Force Survey, 1997 to 2019)

All age groups

3.1

Education and training profile of full-time staff (proportion % )Fewer than one-third of staff with ECE certificate, diploma or degree
One-third to two-thirds of staff with ECE certificate, diploma or degree
Over two-thirds of staff with ECE certificate, diploma or degree

1.3 | Characteristics of ECE Workplaces
We now turn to describing some of the main characteristics of ECE workplaces in Canada.
Table 6 provides the staff, qualifications and pay details at the centre level across Canada
in April 2022. On average, child care centres had 9.7 employees providing direct care on afull-time basis and an average of 3.1 employees providing part-time care. About 52 per centof all centres hired at least two thirds of their staff from qualified ECE and 87.8 per centeither exceeded or met provincial and territorial requirements for ECE staff. The hourly
rate paid to supervisory staff was at $27.8 per hour and for qualified ECEs with training it was
at $21.9 per hour.
In terms of training at the centre level, Table 7 depicts a more detailed picture. 80.3 per centof all child care centres in Canada had at least one full-time ECE staff providing direct care
to children and 71.3 per cent had at least one supervisory staff with ECE qualifications.

15.8
32.1
52.0

Current staffing situation (proportion % )Exceeds provincial or territorial requirements for ECE staff
Meets provincial or territorial requirements for ECE staff
Has permission to operate with fewer than required ECE staff
Reduced enrollment because of an inability to hire ECE staff

40.0
47.8
6.2
6

Mean Hourly rate ($)
Supervisory staff
Employees with ECE training
Employees with no ECE training

27.8
21.9
18

Source: Charters and Findlay (2023)- Table 1 (Parent Source: Statistics Canada, Canadian Survey on theProvision of Child Care Services, 2022.)

Chart 5 examines the vacancies posted by firms to hire ECEs. The chart illustrates a considerable
uptick in the number of vacancies posted after the COVID-19 pandemic (between Q2 2021
to Q2 2022). This sudden increase in vacancies is indicative of the shortages of ECE labour

24

25

Table 7: ECE Training among Centre-based Child Care Providers, 2022
Child care business statistics

Chart 5: Total Number of Job Vacancies Posted for Hiring ECEs, 2015- 2023
per cent (%)

At least one supervisory staff with ECE 4 year degree or graduate training
At least one supervisory staff with ECE 1, 2, or 3 year certifciate or diploma 		from a post-secondary institution
At least one supervisory staff with ECE course or workshop less than 1 year
At least one full time staff providing direct care to children with ECE 4 year 		
degree or graduate training
At least one full time staff providing direct care to children with ECE 1, 2, or 3
year certficate or diploma from a post-secondary institution
At least one full time staff providing direct care to children with ECE course orworkshop less than 1 year
At least one full time staff providing direct care to children with ECE 4 year 		
degree or graduate training
At least one part time staff providing direct care to children with ECE 1, 2, or 3
year certificate or diploma from a post-secondary institution
At least one part time staff providing direct care to children with ECE course orworkshp less than 1 year

16.5
71.3
8.3
14
80.3
31.9
4.5
40.9
25.4

Source: Early Learning and Child Care Information Hub: Statistics Canada https://www150.statcan.gc.ca/n1/
pub/71-607-x/71-607-x2021007-eng.htm

Note: The data are not seasonally adjusted.
Source: Statistics Canada, Table: 14-10-0328-01

Chart 6: Average Quarterly Offered Wage for ECEs, 2015-2023
Table 8: Negative Impacts on Centre-based Child care Services due to COVID-19 in thePrevious Year, Canada, April 2022
Negative impact

21

Response
Yes

No

Per cent
Lower enrolment or fewer children
Difficulty recruiting and retaining skilled child care employees
Loss of employees because of COVID-19-related health concerns
Lost or reduced government funding
Deferred rent on business space
Costs associated specifically with COVID-19 health and safety requirements
Difficulty maintaining government regulations associated with COVID-19 		
health and safety requirements
Temporary shutdown of business
Previous or ongoing loss of revenue
Other

61.3
62
45.1
18.1
6.4
67.7
32.9

38.7
38
54.9
81.9
93.6
32.3
67.1

42.3
37.4
4.6

57.7
62.6
95.4

20
19
18
17
16
15

Nominal Average Offered
Wage
Real Average Offered
Wage

14
13

Note: The data are not seasonally adjusted.
Source: Statistics Canada, Table: 14-10-0328-01
Source: Chartes and Findlay (2023)-Table 2

26

27

Chart 8 shows the quarterly variation of the offered wages to ECEs relative to the offeredwages to all workers. The offered wages to ECEs have been consistently lower than that of
the rest of the workers in other occupations. This is notable because even as the relative
vacancies posted for ECEs have increased, the relative offered wages have not caught up.
It is plausible to attribute, at least to some extent, the difficulties that the centres were
facing in attracting and retaining qualified ECEs to this lack of growth in offered wages.
Chart 7: Share of Vacancies for ECEs in All Occupations, 2015- 2023

84
82
80
78
76
74
72
70

Q2 2015
Q3 2015
Q4 2015
Q1 2016
Q2 2016
Q3 2016
Q4 2016
Q1 2017
Q2 2017
Q3 2017
Q4 2017
Q1 2018
Q2 2018
Q3 2018
Q4 2018
Q1 2019
Q2 2019
Q3 2019
Q4 2019
Q1 2020
Q4 2020
Q1 2021
Q2 2021
Q3 2021
Q4 2021
Q1 2022
Q2 2022
Q3 2022
Q4 2022
Q1 2023
Q2 2023

To provide more context about vacancies and offered wages for ECEs, Chart 7 shows theshare of vacancies posted by all occupations. There has been a significant uptick in therelative number of vacancies for this occupation after the pandemic in the third quarterof 2021. In fact, ECE vacancies increased from 6,000 to slightly more than 12,000 fromthe second quarter of 2021 to the second quarter of 2022. This represents an increase of
more than 100 per cent in the number of vacancies in a year.

Chart 8: Relative Average Quarterly Offered Wage (Nominal) for ECEs to all Occupations,
2015-2023

Per cent

Chart 6 illustrates the Nominal and Real average wages offered to ECEs. While the nominal
offered wages have been on the rise since the onset of the pandemic, the real offered wages
have not been experiencing similar increases. This simply means that the offered wages havenot been raised much more than the increase in the cost of living as measured by theConsumer Price Index (CPI) in post-pandemic years.

Note: The data are not seasonally adjusted. The dashed line shows the moving average of offered wages
over three quarters.
Source: Statistics Canada, Table: 14-10-0328-01

1.6

Table 9: Comparison between Wages Received by ECEs with Comparable Occupations,2021-2022

1.4

Per cent

1.2
1
0.8

0.4

Q2 2015
Q3 2015
Q4 2015
Q1 2016
Q2 2016
Q3 2016
Q4 2016
Q1 2017
Q2 2017
Q3 2017
Q4 2017
Q1 2018
Q2 2018
Q3 2018
Q4 2018
Q1 2019
Q2 2019
Q3 2019
Q4 2019
Q1 2020
Q4 2020
Q1 2021
Q2 2021
Q3 2021
Q4 2021
Q1 2022
Q2 2022
Q3 2022
Q4 2022
Q1 2023
Q2 2023
Q3 2023

0.6

Note: The data are not seasonally adjusted.
Source: Statistics Canada, Table: 14-10-0328-01

Occupation

NOC Code

Min Wage($/hour)Median Wage($/hour)

Max Wage($/hour)

Mean Wage($/hour)

Early Childhood
Educators and Assistants
Instructors of persons
with disabilities
Social and community
service workers
Paralegals and related 		
occupations
Home child care providers
Educational counsellors
Elementary school andkindergarten teachers
Secondary school teachers

42202

15

21

27.75

21.32

42203

23

28.74

34

28.79

42201

17.25

24.18

35

25.48

42200

19.23

31.25

46.88

33.18

44100
41320
41221

14
25
25

17
41
41.21

22.5
50.39
54.95

17.79
39.34
40.65

41220

28.57

45.3

57.6

44.16

Source: Job Bank Wage Data obtained from https://open.canada.ca/data/en/dataset/adad580f-76b0-4502bd05-20c125de9116. The Underlying source for all occupations is the Labour Force Survey except for
Instructors of persons with disabilities whose wages were obtained from Employment Insurance Survey Data

28

29

Table 9 compares the wages of ECEs with eight “comparable” occupations. While there aremany sophisticated ways one can compare different occupations, we only use occupations
with similar NOC (National Occupational Classification) codes and occupational titles asreference for comparison.11
As the data in Table 9 suggest, ECEs have the lowest average (mean) hourly wage among
similar occupations after home child care providers. We must note, however, this pay
disparity could partly be explained by the differences in human capital and educational
attainment of the workers in these occupations.
For instance, according to Job Bank Outlook reports,12 Table 10 provides a breakdown of
the educational attainment of ECEs and Social and Community Service Workers in Ontario.
Table 10: Breakdown of the Educational Attainment of ECEs and Social and Community
Service Workers in Ontario

Occupation

No highschooldiplomaHighschooldiplomaApprenticeship or trades
certificate or
diploma

University
Collegecertificate Bachelor’s degree above
degreebachelor’s
orlevel
diploma
Per cent

Early Childhood
Educators andAssistants

<5

16

<5

52

20

5

Social andcommunity
serviceworkers

5

13

<5

45

27

9

Notably, social and community service workers had a higher share of workers with at leasta bachelor’s degree than ECEs (36 per cent for social and community service workers vs 25
per cent for ECEs) and a lower share of workers with at most a high school diploma (18 percent for social and community service workers vs 21 per cent for ECEs). To what extent theseeducational differences can explain the observed differences in compensation levels between
these occupations requires an econometric or a theoretical model that can properly accountfor other observable and unobservable differences between the workers in these occupations
as well the unique characteristics of the nature of the tasks and working conditions existing ineach occupation (e.g. a compensating differential framework). While this is an interestingquestion that is worthy of more attention, it is beyond the scope of this report.
According to a report by McCuaig et al. (2022) the following can be said about the non-wage
benefit situation of the ECEs in Canada as of 2021:•••

One-third of the licensed child care workforce receive no health benefits.
41 per cent receive no paid personal leave.
Only 17.7 per cent have access to RRSPs or private pensions through their workplace.13

Moreover, a Canadian study by Cleveland and Hyatt (2003) reported that union status is,independently, an important determinant of child care workers’ wages and that being a union
member has a statistically significant positive effect (+17 percentage points) on the averagehourly wage of ECEs. 14

Source: Job Bank Outlook reports.

For example, Robinson (2011), among others, has introduced a notion of occupational distance whichmeasures how distant two occupations are based on the skill set workers in each occupation possess wellas the task requirements of the occupations.
12
See https://www.jobbank.gc.ca/outlookreport/occupation/5180 and https://www.jobbank.gc.ca/outlookreport/occupation/5112
11

30

The source for these data is the Workforce survey in formal child care available athttps://ecereport.ca/media/uploads/wr-downloads/workforce_surveys.pdf
14
The study’s sample included 2,062 educators in licensed group child care centers. The survey wasadministered between April and June 1991. The non-union sample size was 1800 and the remaining
262 educators were unionized. We cannot reliably estimate the share of the unionized workforce in this
sector based on this rather dated study.
13

31

2 | Labour Supply Elasticities of Early Childhood
Educators (ECEs)
2.1 | Literature review
The labour supply elasticity of ECEs15 with respect to wages is a crucial parameter of interest
from an ECEC policy standpoint. Intuitively, it captures the degree to which those in theworking-age population (individuals older than 15 years old) are responsive to wage changes interms of the number of hours they are willing to work as ECEs.16 Formally, denoting the labour
supply elasticity with respect to wages by E, it is obtained through the following equation:

E=(% Change in total hours of labour supplied by the ECEs)(% Change in the hourly wage of ECEs)(1)

There are multiple channels through which the working-age population can theoretically
respond to a wage increase in the ECEC sector:•••

Extensive Margin: The net increase in hours because of workers from other occupations
joining the pool of ECEs, those becoming ECEs from unemployment, and from outsideof the labour force (including discouraged workers, students, persons with disabilities
and retirees).
Intensive Margin: The net increase of working hours supplied by the existing ECEs, including
those switching from part-time to full-time work and those working overtime hours.
Turnover: Higher monetary compensation may affect the decision of the existing ECEs
to exit the occupation for opportunities in other lines of work or leave the labour
force altogether.

The turnover channel is already contained in the extensive margin response. In other words,
the reduction in turnover affects the existing supply of ECEs which is reflected in the extensive
margin estimates. However, we discuss the elasticity of turnover separately for two reasons.
First, as discussed in Section 1, retention of qualified staff is a major issue in this sector andmany child care providers have reported difficulties in maintaining their staff making long-termplanning an acute challenge. Second, the literature concerning the quality of child care, such
as Manning et al. (2017), has found evidence that lower turnover rates, especially among thequalified ECEs, can positively affect child care quality.
It is essential to highlight the fact that labour supply elasticity with respect to wages can vary
based both on the level and rate of change of wages in an occupation. In fact, according tolabour supply theory, labour supply elasticity may be negative, positive or zero. A positive
value indicates that the “Substitution effect” is more significant than the “Income effect”, andtherefore workers would work more hours when wages increase. A negative value means thatthe income effect is dominant and working hours would fall as wages increase. An elasticity ofzero implies no change in working hours in response to wage changes.17 A special case is whenelasticity is equal to one (i.e. unit-elasticity). This means that for every per cent increase in the
ECE wages, their labour supply increases by exactly one per cent.
Moreover, occupations with lower levels of pay generally tend to have a more elastic labour
supply, and within each occupation, workers who are on the lower tail of the pay scale are
more responsive to wage changes (have a higher labour supply elasticity).18
Despite the critical role of this elasticity (E) in mediating the labour supply response of ECEs
to wages, previous literature on this topic has been very scant. This is troubling in light of thedirect link between ECE labour supply, and the amount of funding required to adequately staff
child care centres. Appendix A provides a comprehensive overview of the handful of studies in
the literature.19 In this section, the results obtained from the literature review are reported andused to provide estimates for the potential impacts of the proposed ECE wage increase.
Table 11 summarizes the findings based on reviewing the literature related to the labour supply
elasticity of ECE workers. In terms of the labour supply elasticities with respect to wages, theliterature estimates range between a low of 1.15 to a high of 4. Put simply, this means that studies
have found that raising the wages of ECEs by 1 per cent, would increase the labour supply

The substitution effect captures the relative price of working versus leisure. When wages rise, this effectalways incentivizes workers to work more hours as leisure is now relatively more expensive. The income effectcaptures the change in incentive to work as wages increase because workers can now have the same amount ofincome with fewer hours of work. If leisure is a normal good -i.e. workers prefer to have more leisure when theirincome goes up- then the income effects negatively affect labour supply. The interaction of these two forces isthought to determine the labour supply of a worker in response to any changes in the wage rate.
18
See Azar et al. (2019).
19
It is noteworthy to mention that the labour supply elasticities documented here are not the same as the
supply elasticity of child care in response to ECE wages. In this context, the supply of child care is definedas the availability of fully staffed child care spaces. The data on supply of child care has been scarce and it
depends on many factors including the labour supply responses, capital availability, legal constraints, andregulations in the child care sector. Because of these complexities, the literature has been more focused onlabour supply elasticities instead of the child care supply elasticities.
17

The review and analysis in this section is relevant to the entire ECE workforce in Canada and not just limited
to the ECEs employed at the YMCA.
16
When this study refers to ECE wages, it is implied that the wage rates are measured in real wage terms(adjusted for inflation) and changes are relative to other sectors. For example, a 10 per cent increase in the
ECEs wages during a specific period means that the real wage paid to ECEs has increased by 10 per cent, on
top of what workers in other sectors have experienced in the same period.
15

32

33

of ECEs by anywhere between 1.15 per cent to 4 per cent. As for the turnover elasticity withrespect to wages, the results reported in earlier studies are much more varied and are in therange of -0.5 to -11.2. This implies that a 1 per cent increase in the wages of ECEs reduces
turnover by anywhere between 0.5 per cent and 11.2 per cent. This large variation in estimates
for turnover is due to the different methodologies employed in the studies as well as differencesin the samples considered across various countries. A more in-depth discussion of this topic
has been provided in Appendix A.
Table 11- Summary of Labour Supply Elasticities and Turnover Elasticities of ECEs Reported in
the Literature
Labour Supply
Elasticity with respect
to Wages

Turnover Elasticity
with respect
to Wages

Scope (Country
and Years)

Blau (1993)

1.15 to 1.94–

United States- 1977 to 1987

Blau (2001)

1.15

–

United States-1977 to 1998

Akai and Jibiki(2021)–-2.7

Japan- 2013 to 2018

Bassok et al.
(2021)–-11.2

Virginia- 2019

Browsky et al.
(2022)

2: for ECEs with BA
4: for ECEs without BA–

United States-2019

Cunha and Lee(2023)

Variable: 2 for 25 per centincrease in ECE wages-0.5

Texas-1997 to 2019

Garcia-Vazquez(2023)

1.33 for Lead teachers and1.58 for Child care workers.

–

United States-2001-2007

Study

Source: Estimates discussed in detail in the literature review found in Appendix A.

Considering the suggested wage increase by YMCA Canada in this report is targeted at fully
qualified ECEs, the elasticities extracted from the literature ought to be those that are relevant forthe more educated segment of the ECE (i.e. those with some formal post-secondary education).
For that reason, a labour supply elasticity with respect to wages of 2 is considered the baseline
case in this study. This would be in line with Browsky et al. (2022) estimate for ECEs with a BA
degree, Cunha and Lee’s (2023) estimate of the elasticity associated with a 25 per cent increasein the wages of ECEs and is on the higher end of Blau’s (1993) estimate. We will also conduct asensitivity analysis by considering the lowest reported value in the literature for the elasticity oflabour supply with respect to wages.
As for the elasticity of turnover of the ECEs concerning wages, because of the higher variability
in the literature’s estimates, finding a suitable value is more challenging. Of the three studies
that have obtained an elasticity of turnover with respect to wages we find the one attained by
Cunha and Lee (2023) to be more relevant to the Canadian context and utilize their reported
estimates. This is because of the higher degree of similarity between the U.S. and Canadian
economies compared to Japan (the setting for the Akai and Jibiki (2021) study) and the external
validity concerns attributed to the results of the Bassok et al. (2021) study in Virginia due totheir sample characteristics.
Consequently, all else equal and assuming an overall labour supply elasticity of 2 with respect
to wages, a 25 per cent increase in the wages of ECEs would increase the labour supply in
ECEC sector by 50 per cent. Furthermore, if the ratio of the extensive to intensive margins
are assumed to be the same as in the paper by Blau (1993)21, then around 62 per cent of theadditional labour supply would be on the extensive margin (i.e. attracting new recruits to thesector from other sectors or non-employment including former ECEs who have left the sector)
and 38 per cent would be on the intensive margin (i.e. increase in working hours of the existingECEs). Put differently, for an elasticity of 2, the estimated increase in recruitment of new ECEs
under the proposed 25 per cent wage raise would be 31 per cent and the estimated increase
in working hours of the incumbent ECEs would be 19 per cent.
In terms of the magnitude of the extensive margin response, we consider the total stock of
ECEs to be 207,830 in Canada as reported in Section 1.

2.2 | Quantitative Estimates of the Increased Supply of ECEs

Therefore, the estimated increase in the number of ECE
workforce would be around 64,427 educators arisingfrom the 25 per cent increase in the ECE wages.22

Given the results found in the literature survey and the range of values provided for magnitudeof the elasticity of labour supply with respect to wages and turnover elasticity in the ECEC
sector, we can provide a crude estimate on the expected increase in the labour supply in the
sector which will be forthcoming because of a 25 per cent increase in the wages of fully
qualified ECEs.20

As explained in Section 1, there are differences among provinces in terms who is considered a qualified ECE.
For a general Canada-wide analysis, we take those with an ECE college diploma or certificate to be fully
qualified ECEs.
20

34

Extensive margin elasticity = 1.2 and Intensive margin elasticity = 0.7. To our knowledge, this is the only study
that provides the breakdown of the extensive and intensive margins.
22
0.31 ×207,830 = 64,427. This is assuming that the new educators would work the same number of hours on
average as the current ECE workforce.
21

35

As for the intensive margin response, we use the mean number of hours of 37 reported in
Doherty et al. (2000) as a reference.23 This implies that the mean number of hours worked among
the ECEs would increase by 7 hours to 44 hours per week. The theoretical increase in hours ofwork would be partly due to an increase in the number of hours of work among part-timeeducators (e.g. educators currently working 20 hours per week choosing to work 25 hours perweek), those switching from part-time to full-time hours (more than 30 hours per week),
full-time educators working overtime hours and both full-time and part-time educators taking
more than one job in the ECEC sector (multiple job holding). This last channel of intensive
response is particularly relevant in this sector in view of Seward et al. (2023) finding that slightly
over half of ECE graduates hold multiple jobs one year after graduation as of 2018. This level ofmultiple jobs holding rate, as reported in the labour force survey (2018) is much higher than the
Canadian average that year for women which was at 6.8 per cent.24
To put these numbers in perspective, we obtain the equivalent number of new ECEs that theintensive margin generates. Simply put, this gives the number of new ECEs that will have to join
this occupation and work the same number of hours as the average weekly hours of work of
ECEs to produce the same increase in the total labour supply of ECEs suggested by the intensive
margin response. If the existing 207,830 ECEs work an average of 7 extra hours, then that adds
1,454,810 work hours to the supply of ECEs. Given that the average ECE works 37 hours per
week, this is equivalent to adding 39,319 new ECEs that work 37 hours per week.
As a sensitivity analysis exercise, we now change the value of the elasticity of labour supply
with respect to wages and consider the lowest value reported for the overall elasticity at 1.15 as
found in the study by Blau (1993). An elasticity of 1.15 yields an increase of 28 per cent in termsof overall labour supply, 19 per cent at the extensive margin (equal to an additional 39,488 ECEs)
and 9 per cent at the intensive margin (equal to 3.33 additional weekly hours of work or 18,704
additional ECEs). Table 12 summarizes the two scenarios considered for the labour supply
response of ECEs.

Table 12- Summary of Labour Supply Elasticities and Various Channels of Labour Supply
Response of ECEs
Labour
SupplyResponse
Scenario

AssumedElasticity
Value

Percentage
Increasein Overall
Labour
SupplyPotential
Increasein ECE
Workforce(Extensive
Margin)Potential
Increase in
ECE Weekly
Working Hours(Intensive
Margin)Equivalent
increasein theNumber of
ECEs (Intensive
Margin)Total
Equivalent
increasein theNumberof ECEs

Low
Estimate

1.15

28.0

39,4883.3

18,70458,192

Baseline
Estimate

2.00

50.0

64,4277.0

39,319103,746

Note: There were a total of 207,830 ECEs in Canada in 2021.
Source: Author’s calculations based on the results found in the literature.

This increase in the compensation of qualified ECEs also affects retention and turnover in the
sector. However, we were not able to attain recent estimates for the turnover rates in the ECEC
sector in Canada. The most relevant (albeit dated) figure we were able to find in the literature was
21.7 per cent per year for all positions within the ECE occupation (including supervisors, teachers,
and assistants) provided by Doherty et al. (2000).
We therefore assume an annualized turnover rate25 of 21.7 per cent, a turnover elasticity withrespect to wages of -0.5, 25 per cent increase in the wages of the ECEs. As a result, raising thewages of the ECEs by 25 per cent would reduce the turnover rate by at least 12.5 per cent,which yields a lower sector-wide turnover rate, at 19 per cent annually.26 In this case, about
2.7 per cent of the 207,830 ECEs —5,632 ECEs—who would have left the sector without thisraise, would choose to remain employed as ECEs. This retention of ECEs can be thought of as
an addition to the stock of the available educators each year. We reiterate that this number
would be already accounted for in the extensive margin estimates that were provided earlier.
To gauge the effectiveness of the 25 per cent wage raise proposal we contextualize theincrease in the number of ECEs within the CWELCC framework. The federal government aims
to create an additional 250,000 spaces by March 31, 2026. Based on the Employment and Social
Development Canada’s estimates27 this expansion of spaces requires anywhere from 52,079 to
62,600 ECEs. Even with the low estimate for the labour supply elasticity considered (a labour
supply elasticity with respect to wages of 1.15), the 25 per cent wage increase can potentiallyattract more than enough educators and from this perspective can be deemed sufficient.

In an updated version of this report, Flanagan et al. (2009) report the median number of hours worked to be
37. We acknowledge that the mean and the median number of hours work may not necessarily be the same andthus the two values may not be comparable.
24
Given that this occupation is predominately female we find the comparison with the female labour force
more appropriate.
2336This rate is likely higher post covid given the overview of the sector provided in Section 1.
19 = 0.875 × 21.7
27
See https://www.canada.ca/en/department-finance/news/2022/04/supporting-early-learning-and-childcare.html
25

26

37

We stress that this analysis has made many simplifying assumptions and does not consider
the logistical/capital constraints for expanding child care spaces. As mentioned in Section 1, there
are currently long waitlists for many child care centres and meeting the excess demand in thismarket will certainly require creating new spaces as well which calls for more investment ininfrastructure. Another caveat of the analysis provided here is the fact that we are silent about
the timing of the increase in labour supply of ECEs because of higher wages. We will address
this point to some extent in section 2.3.28
Another method for evaluating the adequacy of this potential increase of the ECE workforce
in response to the proposed wage increase is to take the estimates of the number of “Child
Care Deserts” provided in Macdonald and Friendly (2023). The authors estimate that there were759,000 full-time licensed spaces for younger children (defined as not yet attending kindergarten)
across Canada in child care centres and home-based centres in 2021 and that there were1.97 million younger children who were in the pool of potential users of these spaces. Theirfindings indicate that 946,000 children lived in child care deserts. Their unit of analysis is the
Forward Sortation Area (FSA), which is the first three digits of the postal code as the lowest levelof geographic identification. A child care desert is, therefore, a FSA that has more than threechildren for every licensed child care space. A possible goal of a universal child care program
such as the CWELCC may be to eventually reduce that figure to zero. To that end, it is imperative
to know how many educators are needed to provide that number of spaces and make someassumptions about the mapping of those available spaces to children.
We assume that in the ideal scenario, there will be exactly one child care space for each child(i.e. no sharing of spaces). Given the differences in the staff-to-child ratios across provinces
and their dependence on children’s age, such measure can be approximated by consideringa conservative estimate of 6 for the overall child-to-staff ratio within CWELCC at the national
level.29 This implies that 157,666 ECEs would be needed to fill in the gap in the ECE workforce
to eliminate the aforementioned child care deserts. The employment gains ensuing a 25 percent increase in ECE wages would be able to cover almost 66 per cent of that shortfall underthe baseline scenario, and 37 per cent under the low estimate for elasticity within a year.
It is important to note once again that this analysis only considers the increased labour
needed for the expansion of child care and not the capital/infrastructure requirements
which can add to the amount of time and funding needed to expand the child care spaces.

A recent announcement by the Government of Canada aims to address some of these constraints faced by
the CWELCC program. For instance, commitments to launching a new child care expansion loan program,offering student loan forgiveness for rural and remote early childhood educators and increasing training forearly childhood educators have been made. For more details see https://www.pm.gc.ca/en/news/news-releases/2024/03/28/more-10-day-child-care-spaces-british-columbia
29
The reality is more complex. Each province has its own child-to-staff ratio for children of different ages.
Since we are not aware how exactly the CWELCC aims to distribute the number of spaces among various
provinces and the age distribution of those spaces is not clear we have to make a simplifying assumption.
We choose a child-to-staff ratio of 6 as it conservative and is closer to the ratio required in many provincesfor early years programs (children 0 to 5).

2.3 | Potential Sources of Additional Qualified ECEs andLimitations to Increasing the Labour Supply
In this section we discuss some of the limitations of the analysis conducted so far. There arethree main sources that the child care sector can tap into for attracting new qualified ECEs:
former ECEs that have the qualifications needed to work in the sector in a specific jurisdiction(province or territory); college and university graduates including both graduates with noprevious work experience and those who would switch their occupation to be employed as
an ECE; immigrants and foreign workers that have experience working as an ECE abroad but
their qualifications are not recognized in the jurisdiction that they may want to work. Except
for the first group, everyone else will be required to obtain some additional training which ismainly provided by colleges and universities.30
Seward et al. (2023) report that between 2009 to 2018, ECE college/university programs had an
average of about 6,720 graduates per year across most of Canada.31 Table 13 shows the regional
distribution of these ECE graduates as well as the relative share of children living in each province.
As the data in Table 13 suggest, only three provinces, Ontario, Quebec, and New Brunswick had
a higher share of average ECE graduates relative to their child population. In fact, Ontario, andQuebec account for 78.7 per cent of the early childhood education graduates per year while
having only 60.9 per cent of children aged younger than six years in Canada.
Table 14 provides context for these numbers considering the CWELCC agreements that eachprovince has signed with the federal government. Based on the number of average graduatesthat become qualified ECEs each year, the number of net spaces required to be createdunder the CWELCC (excluding Quebec) and the ratio of qualified staff to total staff requiredby each province. While there is a significant amount of variation among different provinces,it takes approximately four years for the post-secondary education system in Canada to provide
a sufficient number of graduates to support the expansion of the universal child care program.

28

38

The exception would be assistants (Level I ECEs) who in most provinces, are only required to complete 30–
45-hour online course. In British Columbia, one must finish one post-secondary course (estimated at 45 hours),
while Saskatchewan demands the completion of three post-secondary courses, estimated at 135 hours.
31
Data on the territories were not available. See Table 3 in Seward et al. (2023) paper.
30

39

Table 13- Regional Distribution of the Average Number of ECE Graduates and Sharesof Children, Canada, 2009-2018

Occupation(1)
Average Numberof Graduates(2)% Graduates(3)%Children(0-5 years old)

(4)
Difference(Percentage
points)

AB
BC
MB
NB
NL
NS
ON
PEI
QC
SK
Canada (total)

390
450
140
150
<30
40
3,250
<30
2,170
130
6,720

6.07
7.01
2.18
2.34
<0.47
0.62
48.36
<0.47
33.8
2.02
100

13.74
12.33
3.94
1.8
1.13
2.28
38.02
0.36
22.86
3.52
100

7.7
5.3
1.8
−0.5
1.7
−10.3
−11
1.5
0

Note: The Canada (total) row was added to the table. The Ontario row sums the average number of ECEs andRECEs that were reported separately in the original table. For Newfoundland and Prince Edward Island, theaverage number of graduates per year in each province cannot be released because of confidentiality rules.
Source: CSLS Based on Seward et al. (2023)- Table 1 (Parent Source: Post-Secondary Information System 2009–2018; Registered Apprenticeship Information System 2010–2017; Statistics Canada Table 39-10-0041-01.)

40

Table 14- Estimates of New Supply of ECE Graduates Needed by 2025–2026 as a resultof New CWELCC Agreements

Province

AB
BC
MB
NB
NL
NS
ON
PE
QC
SK
Canada(Except for
Quebec)No. ofPromisedNew
Full-TimeSpaces (1)No. of
Total
Staff
Needed(2)

Ratio of
Qualified
Staff
Required(3)

No. of
New ECE
Graduates
Needed(4) = (2) *(3)Average No.
of New
ECE
Graduates
per Year(5)

Years Needed
to Train
Enough ECE
Graduates
to Fill
Promised Spaces(6) = (4)/(5)42,50030,00023,0003,400
2,790
11,90076,700578
N/A
28,000

8,180
6,250
3,833
730
612
2,149
15,980
122
N/A
5,911

33
60
66
50
66
66
60
33
66
50

2,699
3,750
2,530
365
404
1,418
9,588
40
N/A
2,956

390
450
140
150
<30
40
2,880
<30
2,170
130

7
8
18
2
20
35
3
2
N/A
23

218,868

43,767

N/A

23,7506,350

4Note: The Canada row was added to the table. Data from Quebec are missing from Table 2 because they will notadhere to the new federal framework and will continue to receive federal funding and to provide programs andservices for families and children. For this table, the authors assume that there are roughly 20 graduates per year
in Newfoundland and Labrador and Prince Edward Island, where the average number of graduates per year ineach province cannot be released due to confidentiality The agreement in each province generally provides
only the net new spaces to be added in total rather than by age range. The authors calculated the new spacesby age range on the basis of an equal allocation assumption. The years needed to train enough early childhood
education graduates to fill promised spaces is calculated by the number of new graduates needed divided by
the average number of new graduates per year.
Source: CSLS based on Seward et al. (2023)- Table 2 (Parent Source: Canada (2022); Friendly et al. (2020);
McCuaig, Akbari, and Correia (2022); Postsecondary Student Information System 2009–2018; Registered
Apprenticeship Information System 2010–2017.)

41

Chart 8- Labour Participation Rates in Canada: By Gender, 1976-2023
85

To the extent that educators are not required to become fully qualified (obtain ECE
qualifications at college and university levels), such as assistants or former ECEs, the capacityof the colleges and universities to graduate enough students will not pose major challenges
to the increase in the supply of ECEs. However, many new ECE recruits with no background in
ECE or unrecognized ECE credentials (immigrants and some out-of-province educators) will
have to obtain ECE diplomas/certifications and that could hamper the intended rise in thelabour supply of ECEs resulting from any wage increase.

80
75
70
65
60

3.1 | Maternal labour supply
The increase in female labour supply is certainly one of the main goals of modern child caresystems. Chart 8 illustrates the trends in labour force participation in Canada by sex from 1976 to
2022. Women have increased their labour force participation by 15.9 percentage points in that
period and the labour force participation gap between men and women has narrowed considerably.
However, most of that narrowing occurred between 1976 to 2002 and since 2002, the upward
trend in female labour force participation has stagnated. This is in part driven by the aging of
the workforce in Canada, due to an increase in the share of workers older than 65 years old, butthere are other factors in play as well. In addition, to the extent that women do participate in thelabour force, they still tend to work fewer hours. Apart from the loss of potential GDP gains that
this may entail, it will have important implications for the equity between labour market outcomes between men and women.
A large literature, both in Canadian and international studies, has focused on the linkage between
the accessibility of formal child care services and maternal labour supply. In this section, we briefly
highlight the main findings of the studies that have investigated Quebec’s universal child careprogram and then locate these findings in an international context. Subsequently, we use twodifferent estimation strategies to quantify the potential labour supply of mothers in responseto an increase in child care spaces that can be attributed to the proposed increase in ECE wages.

Although it is worth mentioning that more recently the federal government has put a cap on the numberof international students entering Canada. More details can be found at https://www.canada.ca/en/immigration-refugees-citizenship/news/2024/01/canada-to-stabilize-growth-and-decrease-number-of-new-international-student-permits-issued-to-approximately-360000-for-2024.html
32

42

Females

50
45
40

3 | Social Benefits and Returns to Investment

Males

55

1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022

Labour Force Participation Rate

Seward et al. (2023) report, only 1.4 per cent of ECE university graduates and 6.6 per cent of
ECE college graduates were international students. This indicates that these programs do notseem to have been well positioned to utilize the recent expansion of the pool of international
students in Canada.32

Year

Source: Statistics Canada- Table 14-10-0327-02

3.1.1 | Lessons from Quebec Universal Child Care
Reform and the Maternal Labour Supply Response
In this subsection, we will provide an overview of the studies that have investigated Quebec’s
experience with the universal child care program. We discuss the results reported, specificallyas it relates to the labour supply response of mothers to the availability of low-fee spaces in theprovince. We then proceed with providing some basic data related to the evolution of the labour
force participation of mothers in Quebec and the rest of Canada since 1976. We subsequently
use the estimates provided by the literature to control for a variety of factors that may havecontributed to the trends in labour force participation of mothers in Quebec. We do so toestimate the potential labour supply response of mothers in the rest of Canada if they gain
access to a Quebec-style universal child care program under the CWELCC agreements.
In a recent paper, Montpetit (2023) uses novel data on child care coverage rates within Quebecin the period between 1998 to 2003 to find that in regions where child care supply increased
the most,33 the policy increased maternal labour-force participation by 15.6 percentage points
relative to regions with less expansion. He finds that Quebec in general experiences 7.7 percentage point additional growth in the maternal labour force compared to the rest of Canada (in linewith the estimates provided by Baker et al. (2008)). In addition, he finds that on average, mothers
eligible to use universal child care work two additional hours per week.

33

Defined as the regions in the top two thirds of child care coverage expansion.
43

Lefebvre and Merrigan (2008) show mothers with children aged 1 to 5 years old increased their
participation rate between 8.1 to 12 percentage points, experienced growth in annual earnings
by $5,000-$6,000, increased their annual hours of work by 231-270 per year relative to the restof Canada between 1999 to 2003. Lefebvre et al. (2009) compared Quebec mothers with childrenof different ages (0 to 5 years old, 6 to 11 years old, and those 12 to 17 years old) and mothers
in other Canadian provinces to find that the low-fee universal child care in Quebec increased
annual work hours for mothers, particularly for those with a high probability of receiving
a subsidy for a child under the age of 5, and those with less education. The effects in bothstudies were driven by the employment of less-educated mothers.
Focusing on the longer-run effects of Quebec’s universal child care policy on maternal labour
supply, Haeck et al. (2015) estimate that average hours of care including those with no useof child care increased substantially from two hours in 1998 to 11 hours per week in 2008.34
One of the novelties of the Haeck et al. (2015) paper is that it allows the progressive increasein the number of low-fee spaces to interact with the employment and child care use estimates.
For instance, between 2000 and 2001, they found a 5-percentage point increase in mother’slabour force participation rate in Quebec compared to the rest of the country. This growth ofmaternal labour force participation rate in Quebec relative to the rest of Canada reached a peakof 13 percentage points between 2004 and 2005 and remained close to this level until 2008.
The same incremental and positive increasing trend is also observed with the number of weeks
worked by mothers between 2000 and 2008.
The international evidence investigating the relationship between maternal labour supply andaccess to reduced-fee child care is more mixed. Morrissey (2016) provides a comprehensive
survey of the international literature that focuses on the relationship between parental labour
force participation and child care prices. The results indicate that a 10 per cent reduction in theprice of child care would lead to a 0.25–11 per cent increase in maternal employment, likely
between 0.5–2.5 per cent. We note that since under the CLWCC reform child care fees inregulated centres will be reduced to around $10 per day, estimating the price elasticities will not
be a focal point of this study. What matters more in the context of the CWELCC implementationis the access to the low-fee spaces. In Appendix B, we highlight some of the most notable andrelevant studies that investigate universal child care reforms.
In what follows, two different approaches will be used to estimate the effects of the increase in
the wages of ECEs on the labour supply of Canadian mothers, in a setting where the CWELCC
reforms have been fully implemented. The first approach assumes that the outcomes observedin Quebec’s reform can be extrapolated to the Canada-wide reform. While this is a simplifying
assumption, we do not consider it as an accurate forecast of the labour supply response of
mothers as a multitude of variables including the scope and domain of policies, the jurisdictions

Excluding children not participating in child care, they find the conditional effect on child care use to
be additional 2.1 hours per week in child care in 1998 and 3.8 hours more per week in 2008 with a peak at
5.2 hours in 2004. Therefore, not only did the reform induce child care participation, but it also increased
the intensity of care for those participating.
34

44

impacted, and the period of the implementation are different. However, given that Quebec’sreform is a relatively recent experience in Canada and the major similarities between the two
reforms, we believe that this analysis can be the first step in understanding what to expectfrom the expansion of spaces in the CWELCC framework. Alternatively, we estimate thepotential labour supply responses of mothers by accounting for the demand for regulated
spaces in Canada and obtain an estimate of the impact of an increase of such spaces brought
about by a 25 per cent increase in ECE wages on the labour supply of mothers in Canada.

3.1.2 | Extrapolation of Quebec Reform Results to the
Canadian Context
Maternal Employment
In this subsection, we estimate the maternal labour supply elasticity with respect to the
expansion of child care space using the maternal labour supply responses obtained by thestudies in Quebec. To provide some background, we first look at the evolution of the labour
force participation rates of mothers between 25 to 54 years old and with children aged
0 to 5 years old (the population most likely to be affected by universal child care reforms)
in Quebec and the rest of Canada.
Quebec’s universal child care was rolled out on September 1, 1997, with the aim ofincreasing mothers’ labour force participation and improving child development andaddressing inequalities in this regard. It mandated the provincial government to lower therate for regulated child care spaces to $5 per day in a gradual manner. This meant thatparents would pay a fixed reduced rate of $5 a day for child care, and the government
assumed the remaining cost. Initially, only children who had reached the age of four bySeptember 30, 1997, were eligible but by September 1, 2000, all children aged 0 to 5 years
old were eligible. In the phase-in of the program existing fee-waiving and financial aid
programs would also be gradually discontinued as the universal child care program
was expanding.
As Chart 9 illustrates, while the participation rate of mothers with children 0 to 5 years old
in Quebec had been converging to that of the rest of Canada since the early 1980s, the gap
between the two jurisdictions persisted until 1999. Since then, the maternal participation rate
has been consistently higher in Quebec relative to the rest of the country. While we cannot
establish a causal relationship just based on a single chart, this piece of evidence lends support
to the effectiveness of a universal child care program in bolstering maternal labour force
participation. If we focus on more recent developments in the labour force participation rateof mothers with young children, it is interesting to note that in 2023 it has increased only by
0.3 per cent in the rest of Canada while it has increased by 2.2 per cent in Quebec. A recent re-

45

85
75
65
55

ROC

45

Quebec

35
25

1976
1978
1980
1982
1984
1986
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
2014
2016
2018
2020
2022

To better illustrate the magnitude of relative changes in labour force participation in Quebec
and rest of Canada, we provide the size of the labour force and labour force participation rates
of mothers 25 to 54 with children under the age of 5 in Quebec and the rest of Canada between
1998 to 2009 in Table 15. We chose to reflect on this period because it encompasses the earlyphases of the reform’s enactment in Quebec, and it also coincides with the period that will
be used to estimate the elasticity of the labour supply of mothers with respect to child carespace availability.

Chart 9: Labour Force Participation Rates of Mothers (25-54 years old) with Children
ages 0-5 in Quebec and Rest of Canada, 1976-2023

Labour Force Participation Rate (%)

port by the Cross (2024) (Fraser Institute) highlights this issue35 and takes this as evidence
that the national universal child care program has not been successful in its goal of promoting
female labour force participation. While even the more relevant data corresponding to mothers’
participation rates show that the rest of Canada is falling behind Quebec, we believe theeffectiveness of the program should be evaluated based on the number of spaces it hascreated. While we do not have the data for 2022-2023 on the number of centre-based childcare spaces, Beach et al. (2023) report that number of spaces for children between 0 to 12 years
old fell from 1,506,658 in 2019 to 1,490,046 in 2021. Furthermore, according to Statistics
Canada (2023) in 2023, 26 per cent of parents of children 0 to 5 years old who were not using
child care reported that their child was on a waitlist, up from 19 per cent in 2022. These data
show that the number of low-fee spaces has certainly not increased significantly and therefore
one can attribute the lack of considerable labour force participation response to this slow
expansion of the program.

Years
Source: Statistics Canada. Table 14-10-0396-01

Table 15: Labour Force and Labour Force Participation Rates of Mothers 25 to 54
Years old with Youngest Child 0 to 5 years oldLabourForce
Participation 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
Rate(per cent)

The report examines women participation rates as opposed to those of mothers, which we believe is a more
appropriate population in the context of child care. For a more in-depth critique of the Fraser Institute study
see the article by Gordon Cleveland at https://childcarepolicy.net/the-fraser-institutes-evaluation-of-the-10-aday-child-care-reforms/
35

46

QuebecRest of Canada

65.27 65.67 66.73 68.36 69.2 71.49 72.62 74.17 74.63 77.79 77.8 76.68 77.94 75.71 77.36
67.14 68.30 69.27 69.53 69.66 69.94 70.12 70.47 71.09 71.67 72.22 70.62 72.53 71.21 71.71

LabourForce(Thousandsof persons)

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

QuebecRest of Canada

237 235.7 234.9 230.7 222.2 217.9 219.3 223.4 219.1 222.7 241.8 228.2 244.5 232.2 232.7
740.5 749.1 751 735.3 733 732.5 709.8 717.6 711.8 722.6 757.9 703.9 722 742.8 740.5

Source: Statistics Canada. Table 14-10-0396-01

47

Table 15 shows that the labour force participation for mothers between 1998 (the first full year of
the implementation of the program) to 2009 grew by 9.0 percentage points while the increase in
the rest of Canada was only 2.2 percentage points. Juxtaposing the changes in labour force forour population of interest (mothers between 25 to 54 years old and with youngest child under
5 years old) and the availability of subsidized child care spaces in Quebec would allow us toestimate the correlation between these two variables. The number of subsidized child care spaces
in Quebec for each year since 1999 is accessible through the Government of Quebec’s website.
The subsidized spaces include Centres de la Petite Enfance (CPEs) or child care centres, andGarderie Subventionnée (GS) or Day care centres. Table 16, column (3) contains the number ofsubsidized child care spaces in Quebec from 1998 to 2009. The increase in the number of spaces
between 1998 to 2009 is 80 per cent. This implies that every 8.8 percentage points increase in
the availability of subsidized child care spaces was associated with a percentage point increasein maternal labour force participation.
We must stress we are not trying to estimate the labour market impacts of any child care space.
Rather, we are narrowly focused on a universal program that involves the creation of subsidized
spaces in not-for-profit centres. It is certainly the case that in Quebec, many of the spaces
created were in the for-profit centres. This was especially driven by the tax credits that the
government of Quebec provided to families using these for-profit spaces. It also means thatthe potential benefits of the expansion of these spaces stem from both the for-profit centres
and the not-for-profit. However, we do not account for the contribution of the for-profit
centres in our analysis because the rest of Canada will not necessarily experience the same
expansion in for-profit spaces as Quebec did (it is not part of the CWELCC plan). In addition,
we cannot separately identify the contribution of the for-profit and the not-for-profit space
expansions. We note that, for-profit contribution is mainly through lower prices (i.e. mothers
joining the workforce because they have found a lower fee for-profit space) as opposed to anavailability channel (i.e. mothers joining the labour force because there are nearby for-profit
centres that they can send their child to).
It is also critical to notice that these calculations do not necessarily represent the actual elasticity
of maternal labour supply with respect to child care spaces unless we can control for a variety
of other factors such as changes in preferences, aging of the population and cost-of-living
expenses that influence the labour participation of mothers that are unrelated to the expansionof subsidized child care spaces. For that reason, we use the labour supply response estimatesin the paper by Haeck et al. (2015). The authors obtain the labour force participation responseof mothers with children 1 to 4 years old in Quebec relative to the rest of Canada up to 10 years
after the implementation of the reform. In simple terms, this estimated coefficient represents thedegree to which mothers who lived in Quebec before and after the expansion in low-fee childcare spaces, increased their labour supply participation relative to mothers who shared the sameobservable characteristics in other parts of Canada.36

Formally, we calculate:in the labour force participation of mothers
ES = Change% Change in the susbsidized child care spaces(2)

Table 16, column (1) provides the estimates reported by Haeck et al. (2015) between 1998 to
2009. Since NLCSY (National Longitudinal Survey of Children and Youth), the underlying datautilized by the authors is biennial, the labour force participation growth rates are reported every
other year, and the elasticities of maternal labour supply with respect to child care spaces arecalculated accordingly. These elasticities are increasing over time. During the first two years of
the implementation of the reform, the elasticity is found to be around 0.24, while it increases to
3.08 between 2007 and 2009. We can infer from these elasticities that a 1 per cent increase in
the availability of child care spaces in Quebec led to 0.24 percentage points growth in maternallabour force participation between 1998 to 2000 and 3.08 between 2007 to 2009. However, theelasticities calculated in Table 16, column (3) should be treated with caution as the subsidized
spaces reported in column (4) do not include home-based child care centres- Milieu Familial(RSGE)- for the years we are interested in. These centres make up a non-trivial portion of thesubsidized centres network and therefore the real expansion in the total number of child carespaces is certainly greater than what Table 16 suggests. Therefore, we believe the elasticities
reported here represent the upper bound of the actual elasticity values. In addition, the significant
increase in the calculated elasticities from 1998 to 2009 seems a bit surprising. This partiallycould be accounted for by our incomplete information about the actual number of subsidized
spaces as well the delays and long wait times that parents were facing in the initial years of the
program’s implementation. In other words, the fact that parents were not able to find subsidized
spaces may have suppressed the labour supply response of mothers to the increase in child carespaces in the beginning and the response became stronger as the program matured, and more
spaces became available. It may have also been the case that early on mothers who were alreadyworking were more likely to enroll their children into the program. This would in turn reduce thenumber of spaces that would have been otherwise taken by mothers who were not participatingin the labour force and would have decided to start working if they could use the subsidized
child care service.

The observable characteristics that the econometric model controls for include (1) the sex of the child; (2) childage dummies; (3) the age group of the mother at child’s birth (25–29, 30–34, 35 or older; with 14–24 as the omitted
group); (4) the family type (single-parent, with two-parent family as the omitted group); (5) a dummy for whether themother was born in Canada; (6) the mother’s highest level of education (less than a high school diploma, high school
diploma, some postsecondary education, trade, or college diploma, with a university diploma or more as the omitted
group); (7) the presence of siblings (older, younger or same age, and the omitted group is children with no sibling),and other children; (8) the size of the community of residence (5 groups ranging from rural to 500,000 inhabitants;
the omitted group is those with more than 500,000 inhabitants); and (9) the provincial unemployment rate.
36

48

49

Table 16- Maternal Labour Supply Elasticities (Extensive Margin) of Mothers with Children
1 to 4 years old with Respect to Child Care Spaces

PeriodLabour Force
Participation
Increase (%) (1)Percentage Change
in Subsidized
Spaces % (2)Subsidized
Spaces(3)

Biennial Growthin Subsidized
Spaces (4)1998-1999

0

N/A

63,528

N/A

2000-2001

5

20.6

76,62013,092

2002-2003

8

15.0

88,07911,4592004-2005

13

16.0

102,188

14,1092006-2007

10

7.6

109,961

7,773

2008-200912

3.9

114,241

4,280

Figure 2: Fee reductions and estimated gross annual savings for regulated/licensed childcare per child as of January 1, 2024 (compared to 2019 fees)

Note: The Subsidized Spaces include only centre-based (Not-for-profit and for-profit centres that offer
low-fee spaces). The estimates for home-based spaces were not available in the latest data announced by
the Government of Quebec’s website.
Source: The relative labour force participation rate growth is obtained from Haeck et al (2015)- Table 2.
Subsidized Spaces data were gathered from the Government of Quebec’s website at https://cdn-contenu.quebec.ca/cdn-contenu/adm/min/famille/publications-adm/Developpement-places/Developpement-places-global-1999.pdf

We would need to make some additional simplifying assumptions and clarify a few points before
proceeding further with the analysis. First, because labour supply elasticities of ECEs with respect
to wages that were introduced in Section 2 were static (one-time bonus of 25 per cent wage
increase), we cannot estimate the dynamic impacts of the increase in spaces on maternal labour
supply. Effectively, our estimates capture the static responses of mothers’ labour supply (thosewith children 1 to 4 years old) to the availability of low-cost spaces.
Second, it is important to stress that the rest of Canada is not homogenous in terms of its
child care system. In fact, there are substantial provincial differences. Other than Quebec,
there are four other provinces and two territories that have achieved average fees lower than
$10 per-day, per-child (Figure 2). There are quite divergent coverage rates depending on theprovince. Provinces with low coverage rates experience a larger maternal labour supply
response because of space expansions compared to provinces with higher coverage rates.
We are abstracting from these provincial differences to avoid complicating the analysis further.
In a sense, we are averaging out these coverage differences within the rest of Canada. So, one
can interpret our results as the average of to the rest of Canada vs Quebec.

Source: https://www.canada.ca/en/employment-social-development/campaigns/child-care.html

For estimating the static response, we take the average relative increase in the labour force
participation rate of mothers in Quebec and the average increase in the number of spaces overthe 1998 and 2003 period. As the note in Table 16 mentions, the Government of Quebec’s data
does not include the home-based centres that were offering low-fee spaces in Quebec.37 With
that caveat in mind, around 32,276 spaces were created between 1998–1999 and 2002–2003(the first 5 years of the program). This implies that the number of regulated centre-based spaces
would have increased by 50 per cent in this period (0.50 = 32,276/63,528). The average increasein the labour force participation of mothers five years into the implementation of the program is

The Government of Quebec published data states: “It should be noted that we do not hold, for the years
indicated by N/A, the number of places offered in the RSGE (Home-based spaces), as we only hold the
maximum number of places authorized in the budget (upon approval). As the two data were not comparable,
it was not possible to complete the information.”
37

50

51

10.5 percentage points (the average of rows 3 and 4 of column 1 of Table 16). Therefore,
the implied elasticity of maternal labour supply of mothers with children 1 to 4 years old
in Quebec would be:

ES =

10.5
50

= 0.21

As was shown in Section 2, the additional ECEs entering the ECEC sector due to the 25 percent increase in ECE wages, would allow the 250,000 additional spaces intended by the
CWELCC agreements to materialize. The report Early Childhood Education and Care in
Canada, 2021 (Beach et al., 2023) estimates that there were 627,333 regulated child carespaces for children under the age of 5 in Canada.38 This entails that subsidized spaces
would increase by 40 per cent. Hence, the implied increase in labour force participationof mothers with children 1 to 4 years old in Canada would be around 8.40 percentage
points (8.40 = 40 × 0.21) over five years or an annual average of 1.68 percentage points.

This estimate has two caveats. First, it does not account for mothers who will not work even if
they use formal child care. To address this issue and estimate the number of non-employed thatwill not join the labour force even if they use a centre-based child care space, we utilize theestimates provided by Zhang et al. (2021) from the 2017 GSS (General Social Survey) sample ofmothers with children 1 to 12 years old. In their sample, 34.2 per cent of mothers have children
1 to 3 years old and 7.1 have children 4 to 5 years old. Together, they make up 41.3 per cent of
the sample. Non-employed40 mothers make up 18.6 per cent of their sample. The authors
report that 38.7 per cent of mothers with children 1 to 3 years old and 37.3 per cent of motherswith children 4 to 5 years old who are not employed use some type of non-parental care.
About 46 per cent of mothers with children 1 to 3 years old and 37.3 per cent of mothers withchildren 4 to 5 years old use child care centres and 72 per cent of the sample use full-time care.
Therefore, the share of non-employed mothers that will be using a full-time child care spaceand remain non-employed can be estimated as follows:

Share of non-employed mothers with children 1 to 5 years old using
child care = (34.2/41.2) × 38.7 + (7.1/41.2) × 37.3 = 38.5%

3.1.3 | Estimation of Maternal Labour Supply Based on
Projected Space Availability and the Current Potential
Demand for Child care Spaces in Canada

Share of all mothers with children 1 to 5 years old who use
centre-based care = (34.2/41.2) × 46 + (7.1/41.2) × 37 = 44.6 %Share of non-employed mothers among all mothers using child care = 18.6%

We now turn to an alternative method for estimating the potential increase in mothers’ labour
force participation that the expansion of low-fee child care spaces can bring about.
According to Survey on Early Learning and Child Care Arrangements (SELCCA) conducted by
Statistics Canada, as of 2023, 44 per cent of children under the age of 6 did not use any form of
non-parental child care (licensed or unlicensed) services in Canada.39 In December 2023, there
were 303,300 mothers aged 25 to 54 with youngest children between 0 to 5 years old in Canada
who were out of the labour force considering a child-to-mother ratio of 1.33 ( as implied by
the current national fertility rate), that amounts to 403,389 children. We note that about
38 per cent of parents who do not use child care services have stated a preference for caring
for their children according to Statistics Canada (2022b). Therefore, the estimated “take-up”
of universal low-fee regulated child care services by mothers who are not in the labour force
would be approximately 188,046 mothers or 250,101 children.

Share of all mothers with children 1 to 5 years old who use centre-based care
and are unemployed = 38.5% × 44.6 % ×18.6% = 3.1%
Second, it does not factor in the “crowding-out” effect. As previous studies such as Haeck et al.
(2015), Havnes and Mogstad (2011) and Baker et al. (2008) have documented, the introductionof low-fee and universal child care can “crowd out” a significant portion of informal care (i.e. careby a family member or friend, unregulated home-based child care, at-home care by a nanny andother alternative arrangements). It is not clear ex-ante how significant this crowding-out effectwould be. In what follows, we will try to estimate the potential size of this effect.

Number of regulated full- and part-day child care centre spaces for children 0 – 5 years old (627,333).
We note that this is an under-estimate of the total number of spaces as we have not been able to findthe breakdown of centre-based and home-based spaces
39
See https://www150.statcan.gc.ca/n1/daily-quotidien/231205/dq231205a-eng.htm
38

40

52

Excluding mothers on maternity leave.
53

Estimation of the Crowding-out of Informal CareAs Baker at al. (2008) mention, the difference between the increase in child care use (measured
by the increase in the number of children enrolled in child care) and the increase in maternallabour force participation, is due primarily to the crowding out effect of the informal child carearrangements. Because at this stage we do not have an estimate for the maternal labour force
participation response (in fact, estimating this is the goal of this section), we assume that thecrowding out effect will have the same per cent change in response to a per cent increase inspaces that it had in Quebec.
Montpetit (2023) provides the percentage of increase in children being in formal care (Centrebased care) between 1997 and 2003 in Quebec. Using the growth in centre-based spaces, wewould be able to infer the elasticity of crowding out of informal child care arrangements withrespect to the expansion of regulated spaces. Montpetit (2023) estimates that the use of formalchild care grew by 13.8 percentage points by 2003 from its baseline of 42 per cent in 1997.
Given there were about 530,000 and 443,000 children 0 to 5 years old in Quebec in 1997 and2003 respectively (Beach et al, 2023), that implies a growth of the number of children in carefrom 222,600 to 265,800 or 19.4 per cent.
In the same period, the labour force participation rate of mothers with children between 0 and
5 increased by 7.7 percentage points in Quebec, from a baseline labour force participation rateof 66.7 per cent and a labour force size of 234,900 in 1997. This represents a growth of labour
force to 261,888 or 11.4 per cent.
Therefore, the upper bound of the crowding out of informal care in that period would be
41 per cent (41 = (19.4-11.4)/19.4) per cent of additional spaces.41 So if 250,000 spaces are
created, 102,500 will be used by mothers who are already employed. Subtracting this fromthe potential take-up of 250,101 spaces yields:

Child care space take-up - crowding out = 250,101 – 102,500= 147,601 spaces
Considering a child-to-mother ratio of 1.33, that is equivalent to 110,978 mothers. As a result,the estimated increase in the labour force participation of mothers is 110,978. Therefore:% Increase in Maternal labour force =(110,978)× 100 = 9.44% (3)(1,175,100 )This is the upper bound of the crowding out because we are assuming that if child care spaces grow, a portion
will be taken up by non-employed mothers who did not use child care arrangements (and began joining theworkforce as a result) and the remaining portion is taken up by employed mothers who had informalchild care arrangements but have switched to formal child care (i.e. the crowding out of informal care). This
ignores mothers who use formal child care spaces and choose not to join the workforce. As calculations in theearlier section show this group accounts only for 3.1% of all mothers with children 0-5.
4154This represents a 9.44 per cent increase over the current baseline of the maternal labour force
or 7.54 percentage points over the current labour force participation rate of 79.7 per cent formothers with children under five years old.
Note that the number estimated above is not directly comparable to the results in Subsection
3.1.2 and is subject to numerous caveats including the fact that we are not considering thetimeframe in which this potential increase in the maternal labour force participation would takeplace. If we take the timeline of the CWELCC agreement, the federal government intended tocreate 250,000 new child care spaces between 2021 and 2026. That implies each year 50,000
additional spaces would need to be added. Ignoring the operational constraints outlined in
Section 2, that would imply that the expected annual increase in the maternal labour force42
would be around 1.51 percentage points.

3.1.4 | Estimation of Revenue and Cost of the Proposal
YMCA Canada has referred to the estimates provided by Cleveland (2023) that finds raising
the wages of fully qualified ECEs throughout Canada (including Quebec) by 25 per cent, would
come at an annual cost of $1.2 billion. Given an annual full-time43 salary of $32,760 per year for
qualified ECEs calculated at the median hourly wage of $21 per hour, this amount is equivalent
to hiring 36,630 new ECEs paid the current median wage rate.
On the revenue side, we follow the methodology of Fortin et al. (2012) that estimated thepotential revenue gains of the increase in female labour force participation in Quebec postuniversal child care reform. In their framework, the increase in total employment multipliedby the average productivity of the newly added workers is equated with the increase in total
income (and therefore total GDP).
Applying this methodology to our results, we find that increasing the labour force participation
rate of mothers with children younger than five years old by 1.51 to 1.68 percentage points44
per year grows the overall labour force by anywhere between 0.082 to 0.091 percentage
points.45 Assuming that the average productivity of the added workforce is the same as
Fortin et al. (2012) estimates for Quebec, 95.6 per cent of the existing workforce, the increase
in GDP brought about by the additional expenditure in the ECEC sector is between 0.075 and0.078 percentage points in a year. Considering the current (as of Q3 2023) Canadian Nominal
GDP of $2.89 trillion that amounts to anywhere between $2.25 to $2.48 billion per year.46

To be specific, only for mothers between 25 to 54 with children under five years old.
Assumed to be 30 hours per week.
44
The two estimates of additional labour force participation provided in Subsections 3.1.2 and 3.1.3
451,175,100 /21,586,900 × 1.68 = 0.091 percentage points and 1,175,100 /21,586,900 × 1.51 =0.082 percentage points
46
0.00086×2.89 trillion dollars = 2.48 billion dollars and 0.00078×2.89 trillion dollars = 2.25 billion dollars
42
43

55

Taking the estimated cost of funding this proposal at $1.2 billion,
that means that for every dollar spent on increasing the ECE wages,
the increase in labour force participation of mothers can potentiallybring between $1.88 (1.88 = 2.25/1.2) and $2.06 ( 2.06 = 2.48/1.2)
in economic benefits each year.
The following list of Canadian studies have found benefit-to-cost ratios that are moreor less in line with our estimates:
•
•
•
•
•

Prentice (2007): 1.58
Fortin et al. (2012): 1.72
Cleveland and Krashinsky (1998): 2.00
Peters et al. (2010): 2.00
Fairholm (2009): 2.42

It is important to note that we have made some critical assumptions to obtain the benefit-tocost ratio. First, we assumed that without the additional $1.2 billion funding, the desired numberof spaces in the CWELCC program could not be created. A natural consequence of this assumption
is that all the economic benefits of the policy will only be available if the ECE wages are increased
by 25 per cent. We acknowledge that even absent this wage increase (status quo) some additional
spaces will be created (and have been created since 2021). Unfortunately, we do not have themeans to estimate this counterfactual increase in spaces and labour force supply responseof mothers.47
Second, we are not accounting for some of the additional monetary benefits of the policy.
These include the increase in the working hours of mothers who are currently employed (those
who switch from informal care or no child care use to formal care), the reduction in the social
benefits paid to families related to child care expenses (e.g. child tax credits) and the increase indisposable income of families who pay lower child care costs (compared to the current rates).
Also, while we discuss some of the long-term effects on child development and later-life
outcome, we are not able to predict those effects ex ante.48

Table 17 summarizes the most important assumptions and results of the report so far:Table 17- Summary of Key Assumptions and Results
Assumptions
ECE Wage Increase
Cost of Funding the Wage Increase
Number of Additional
Spaces Created
ECE Labour Supply Elasticity
Average Number of New ECE Graduates
Maternal Labour Supply Response Channel
Child-to-Staff Ratio
Child-to-Mother Ratio
Source of Benefits
Type of Benefits

25 per cent$1.2 billion
250,000 formal child care spaces at not-for-profit
child care centres
1.15 (Conservative) and 2 (Baseline)
6,350
Only the extensive margin (Decision to work)
6 (Conservative) for children 0 to 5 years old
1.33 (National fertility rate)
Only limited to the expansion of centre-basedchild care centres
Economic benefits (GDP)Results

ECE Labour Supply Response
ECE Retention Response
Years Needed to Train New ECEs
Maternal Labour Supply Response
Economic Benefits
Benefit-to-Cost Ratio

58,192 ECEs(Low estimate)
103,746 ECEs (Baseline estimate)
5,632 ECEs
4
7.54 to 8.40 Percentage Points (Over five years)
Annual Average increase of 1.51 to 1.68 pp$2.25 to $2.48 billion per year
1.88 to 2.06

Source: CSLS calculations.

A recent report by CBC that was released after the writing of this report has found that between 2021 and March2024 around 97,000 spaces have been created. Most of those were in Ontario (41,000). However, the spaces in
Ontario have in fact been created since 2019 and the authors of the report were not able to determine how manyof these spaces are part of the subsidized national program (CWELCC). https://www.cbc.ca/news/politics/child-careten-dollars-day-trudeau-daycare-1.7141421
48
Considering the total government expenditure to fund the universal child care program ($30 billion over five
years or an average of $6 billion annually), the return on investment of the entire program (not just the additional
expenditure to increase the ECE wages) would be considerably lower. However, estimating the return of the entire
program is not the goal of this report. We also note the numerous caveats to the estimated benefits mentioned in
the text (e.g. excluding the intensive margin response of mothers, reduction in benefits paid for child care etc.)
47

56

57

3.2 | Short-run and Long-run Effects on Children Development,
Human Capital Formation and Later Life OutcomesA large body of literature has investigated the effects of child care education programs on
the development and future life outcomes of young children. One set of studies has focused
primarily on targeted interventions that were aimed at disadvantaged and at-risk children,
while others have examined the short-run and long-run effects of universal child care programs.
The studies in this literature measure a variety of metrics including cognitive and non-cognitive
outcomes, school performance, crime rates, employment, and earnings. This section reviews
the main findings of the literature with more emphasis on recent and Canadian evidence(mainly from Quebec).
Starting from Quebec’s experience with universal child care, one of the first papers that
documented negative short-term behavioural impacts on children enrolling in child carecenters in the province was Baker et al. (2008). The authors obtained a negative and significant
change in scores for hyperactivity-inattention, general anxiety, separation anxiety, and physicalaggressiveness and opposition for children in Quebec compared to the rest of Canada.
The Peabody Picture Vocabulary Test (PPVT) score which proxies motor and social
development in this study demonstrated a decline as well, but the estimated effect was notstatistically significant. Most child health outcomes considered in the study such as the child’s
health conditions deteriorated. This was especially true for younger children (0- to 4-year-olds).
Some of the parenting behaviour and mental health measures also exhibited a significant decline.
The estimated effects on “Hostile, ineffective parenting”, “Consistency”, “Satisfaction with therelationship”, mother depression scores and father health measures were all negative andstatistically significant.
Taking a longer-term perspective on Quebec’s universal child care program, Kottelenberg andLehrer (2013) show that most of these short-term negative effects documented in Baker et al.
(2008) were also present for the more recent cohorts of children in later years and founddifferent impacts based on sex, age and single-parent status of children in subsequent
work (Kottelenberg and Lehrer, 2013; Kottelenberg and Lehrer 2018).
Baker et al. (2019) also confirm that these adverse non-cognitive impacts persisted toadolescence for earlier cohorts of children enrolled in Quebec’s universal child care system,as measured by higher crime rates, worse self-reported health, and lower life satisfaction andthat these findings were more considerable for cohorts with higher child care access.
Concentrating on PPVT test scores for the full sample of children 4 to 5 years old and not
yet eligible for school in Quebec 10 years after the implementation of the child care reform
Haeck et al. (2015), document negative but generally non-statistically significant impacts.
Further, disaggregating the sample by the education level of the mothers, they report moresignificant and negative effects for children of low-educated mothers.
The authors provide two explanations for these adverse outcomes that are worth highlighting.
First, because of the structure of the reform, the Government of Quebec created an incentive

58

for child care centres to offer full-time, full-week spaces and if a space is not occupied full-time
the subsidy may be reduced. In practice, most centres exclusively offered full-time full-week
spaces. This led to Quebec’s children using child care (children enrolling in centre-based care) ata much higher rate than the rest of the country. Second, two major studies on the first years of
the program (ISQ, 2004; Japel et al., 2005) showed that the average quality of child care was far
from optimal, and it was especially worse for impoverished children. In fact, as Japel et al. (2005)
report, more than 20 per cent of children from the lowest-income quartile in child care were inchild care of inadequate quality. The comparable statistics for the two upper quartiles was
10 per cent. In addition, about 70 per cent of lower income children in child care centres were incentres of average quality or lower. As Haeck et. al. (2015) elaborate, these disparities could be
partly attributed to the rapid implementation of the program and the creation of new spacesthat did not coincide with recruiting enough qualified ECEs. As a result, the enforcement of
the provincial requirements at the individual child care centre level regarding the educational
requirements and the child-to-staff ratios has proven to be challenging.49
Examining the long-term effects of the policy in dimensions related to parental outcomes
and their interactions with children, Brodeur and Connolly (2013) find that the policy led toa decrease in parents’ subjective well-being. The authors attribute this to the “Second Shift”
effect, where women work more but are still engaged in household and childrearing activities.
However, they found significantly positive effects for low-income families and and parents witheducational attainment up to high school, while the estimated effect for middle-income families
was negative. Another result of this paper was the estimated heterogeneous effects on satisfaction
with work-life balance based on gender. Kottelenberg and Lehrer (2018) found that parents in
two-parent households with four-year-old children, who were induced to increase child careuse by the policy change, increased their propensity to read to the child daily, while similar
parents of children younger than four decreased their daily reading propensity. Molnar (2023)
finds evidence that the impact of program eligibility in Quebec reduced the parents’ propensity
to read to their child daily. However, it did increase reading time at the lower end of the reading
distribution by decreasing the propensity to never read to child and increasing the propensity
to read once or several times per week.
One of the most recent pieces of evidence to come out of the Quebec reform is the study by
Montpetit (2023) which finds that the reform had positively affected reading time, especiallyfor children at the bottom of the reading distribution. Based on the authors’ calculations, theproportion of parents reading at least once per week to their child increased by 4.7 percentage
points. Also, the share of parents never reading to their child dropped by 6 percentage points.
These effects were mainly driven by parents in regions within Quebec that had the highest
expansion in universal child care. These results thus suggest that mothers compensated forincreased work hours by exerting more effort in parenting when they are home.

A report conducted by the Office of the Auditor General of Québec available at https://www.vgq.qc.ca/Fichiers/
Publications/rapport-annuel/2011-2012-VOR/en_Rapport2011-2012-VOR.pdf found that in 2008-2009,42 percent of subsidized centres exceeded the maximum ratio of the number of children per qualified ECEs
and that figure rose to 54 per cent in 2009-2010.
49

59

While the Quebec experiment with universal child care reform has seemingly been slightly
to significantly negative depending on the child outcome of interest and the time horizon
taken50, the international evidence regarding the expansion of universal child care and its
interaction with children’s long-term outcomes is mixed.

college attendance, SAT test-taking and high school graduation. The authors also find evidence
that participation in the program decreases adverse social outcomes such as juvenile incarceration
but has no detectable impact on state achievement test scores. This study also uncovers genderdifferences for these gains and found them to be greater for boys than for girls.

In the Norwegian context, Havnes and Mogstad (2011b) studied adults between 30 and 33
years old, who would have been eligible for the universal child care expansion in that country
in the 1970s. Relative to the control group, they obtained positive coefficients for the treatmentgroup51, for the following list of variables: years of education, college attendance, the childbeing an average earner (as opposed to being a low earner), and the child being single andnot a parent later in life. They also found a reduction in the likelihood of dropping out of highschool and being on welfare.

While it is certainly difficult to summarize the findings of this vast and evolving literature, thefollowing points can be made regarding the short-term and long-term outcomes of universal
child care programs:

Using administrative data from Germany and studying the expansion of a universal child careprogram aimed at 3 to 6-year-olds in Germany, Cornelissen et al. (2018) discovered substantial
variation in the returns to early child care attendance. They specifically report that children of
immigrants in Germany are less likely to attend child care early but experience higher returns
for school readiness than native-born children. They attribute this result to lower quality ofchild care provided by informal child care arrangements. Therefore, in the words of the authors,“formal child care acts as an equalizer”.
More broadly, and in a relatively recent survey of the literature, Dietrichson et al. (2020) review
26 studies using natural experiments to understand the effects of universal preschool programsfor the general population of children. In the studies that they investigate, the results related
to test scores and school achievements and school grades are mixed, from significantly
beneficial effects to significantly harmful ones. However, most studies reporting differences
over Socio-Economic Status (SES) find more beneficial/less harmful effects for children fromfamilies with low SES. In terms of future educational attainment of children, there seems to bealmost a consensus in improvements on either year of schooling or the highest grade completed.
Most of these studies report higher gains for low SES children, with only one study finding thesame effect for children with highly educated mothers. Lastly, on measures related to earnings,
employment, and being on welfare, measured at ages from 23 to 59 years, most studies findbeneficial and statistically significant effects for the general population of children with
substantial variation underlying the average effect.
Gray-Lobe et al. (2022) use admissions lotteries to estimate the effects of large-scale publicpreschool in Boston and conclude that preschool enrollment increases the propensity of

It is worth mentioning that the expansion of child care spaces in Quebec was driven both by the for-profit (funded
by a tax credit) and not-for-profit (directly funded by government subsidies) centres. On average, for-profit centres
seem to offer lower quality of care. Therefore, these negative outcomes may partly be attributable to an increase in
the for-profit spaces. A more detailed discussion about this issue is presented in section 3.3.
51
To define the treatment and comparison group, the authors order municipalities based on the increase in childcare coverage rates from 1976 to 1979 and then separate the sample at the median. Those regions in the upper
half (above median) of expansion constituted the treatment municipalities and the ones in the lower half were thecomparison group.

•
		
		
		
		
		
		
		
		

The structure of the program matters. The eligibility criteria (means tested vs universal,
eligibility based on a mother’s employment status, children’s eligibility age, full-timevs part-time care) can play an important role in shaping children and parental outcomes(e.g. labour supply response of mothers, child care use, long-term developmental
outcomes of children etc.). In addition, other forms of government transfers can reinforce
a universal child care system. For instance, Milligan and Stabile (2011) find that childbenefit programs in Canada had significant positive effects on test scores and several
measures of both child and maternal mental health and well-being that show embarked
improvement with higher child benefits.52

•
		
		
		
		
		

Having an adequate number of well-trained and motivated qualified staff is vital to thesuccess of universal programs. One major issue with the Quebec experiment was that therollout of new spaces severely lagged the increase in demand for low-fee spaces, in part
because of the lack of qualified ECEs. To address these shortcomings, the governmentof Quebec had to resort to hiring educators with lower qualifications which, to someextent, can explain the negative observed outcomes for the enrolled children years later.

•
		
		
		
		

The existing non-parental child care arrangements in Canada and the degree to which
formal regulated care can represent an improvement over them (i.e. the magnitude of
the crowding-out effect) not only influences the contemporaneous effects in terms ofchild care use and maternal labour supply, but it will also have long-term consequences
for the effectiveness of the program and children’s development.

•
		
		
		
		

Disadvantaged children seem to be the main beneficiaries of an expansion in access to
subsidized child care spaces. This finding has been robust to the outcomes studied, time
horizon (short-term vs long-term) considered and location. To the extent that equity andclosing socioeconomic gaps is a priority, ensuring equal access to affordable child carespaces can be of great benefit.

50

60

The authors also report interesting differences in the effects of benefits by sex of the child. Benefits
could have stronger effects on educational outcomes and physical health for boys, and on mental healthoutcomes for girls.
52

61

3.3 | Quality of Care
Lack of high-quality child care and education represents a great risk to the development ofchildren realizing their full potential in later stages of their life and would deepen the socioeconomic inequalities. The potential negative consequences include poor social, emotional,
educational, health, economic and behavioural outcomes which are more acute for disadvantaged
children. However, defining what quality of care is in the context of early learning and child care
is not a simple task and there are multiple angles from which one can evaluate the quality ofchild care services. Katz (1992) suggests four different perspectives for measuring ECEC quality:• Top-down: examines quality by focusing on selected characteristics of the program		 and environment, usually evaluated by an assessor.
• Bottom-up: focuses on children’s experience of the program. This method is particularly		 suitable for evaluating the quality of child care services provided to children with special
		 needs (Spiker, Hebbeler, & Barton, 2011).
• Inside: defines quality as perceived by the staff including along the dimensions of		 collegial relationships, staff-parent relationships, and staff-sponsor relationships.
• Outside-inside: highlights the parent-teacher relationship and evaluates whether the		 parents’ expectations or pedagogical goals are compatible with the curriculum.
The most common approach to measuring the quality of ECEC programs is the top-down
perspective. This perspective encompasses broad parameters of program and state policies(distal features) and curriculum and caregiver-child interactions (proximal) features of an
ECEC program. Clifford, Reszka, & Rossbach (2010) explain a common disaggregation of themultidimensional ECEC quality into two related components: (1) structural quality - structural
indicators such as staff-to-child ratios and caregiver characteristics such as teacher formal
education; and (2) process quality - including learning opportunities available to the children,and teacher-child and peer-to-peer interactions within the child care environment. Bothcomponents share the same objective of improving the development opportunities ofchildren and enhancing their early learning outcomes.
Increasing the wages of qualified ECEs by 25 per cent has the potential to increase both
structural and process quality components through the following mechanisms:
•
		
		
		
		
		

Higher compensation attracts more qualified ECEs and increases the share of qualified
educators (or put differently, it raises the average educational attainment of ECEs).
In a meta-analysis, Manning (2017) examines the correlation between teacher
qualifications and the quality of early childhood learning environments by reviewing
the findings from 48 studies with 82 independent samples.53 Overall, the results of themeta-analysis show that higher teacher qualifications are significantly correlated with

Studies included children from pre-kindergarten and kindergarteners prior to elementary/primary school
and centre-based providers from various countries.
53

62

		
		

higher quality early childhood education as measured by the environment rating scaleand subscale ratings including program structure, language, and reasoning.

•
		
		
		
		
		
		
		
		
		
		
		
		

As described in Section 1, raising ECE wages reduces the turnover of educators in the
sector. Totenhagen et al. (2016) note several studies that obtain a positive relationship 		
between wages and reduced ECE turnover. Reducing turnover can potentially increase
the quality of care and education provided to children. According to the attachment
theory, young children’s attachment security and positive interactions with an ECE canalso positively influence their development, just as secure maternal relationships would.
Teacher turnover can disrupt these relationships which may negatively affect the process
quality components such as children’s cognitive and social-emotional development(Cryer et al., 2005) and executive functioning skills (Graziano et al., 2016). In addition,
as Bryant et al. (2023) discuss, ECE turnover can cause families to face difficulty indeveloping a positive relationship with the new educator and it could also affect thestaff who remain by disrupting schedules and teamwork. Finally, turnover creates
additional costs and administrative burdens for ECE centres.

•
		
		
		
		
		

Hiring more staff induced by higher wages increases the pool of available ECEs andwould allow child care centres to keep meeting the staff-to-children ratios requirements
and even exceed these minimum thresholds to offer higher quality of service. Blau (2000)
found that a higher staff–to-child ratio appears to have beneficial effects on child carequality when unobserved differences across centers are not accounted for. However,these effects become much smaller when he accounts for these unobserved differences.54

•
		
		
		
		
		

Raising the wages of ECEs may lead to improvements in job satisfaction and thecommitment of ECEs to educating young children. Stremmel et al. (1993) surveyed
544 early childhood staff to examine the relationship between job satisfaction (which
included compensation), communication, age, specialized training, and length of
employment with emotional exhaustion. The results suggest that while salary is an
issue, low salary alone does not fully explain the emotional exhaustion of ECEs.

•
		
		
		
		

As discussed in Section 3, expanded child care spaces forthcoming from raising ECE 		wages would crowd out some of the informal care arrangements that mothers utilize
absent sufficient affordable child care spaces. To the extent that these informal
arrangements are of lower quality, the expansion of formal child care spaces increase
the quality of early education through a compositional effect.

In addition, the type of child care spaces created can play an important role in the quality of childcare services provided. Cleveland and Krachinsky (2004) show that the quality of care is superior in
not-for-profit centres compared to for-profit centres. This was mainly a result of the lower childto-staff ratios, more trained staff and more professional development opportunities for staff –than in for-profit centres. On top of that, not-for-profit centres offer higher wages andbetter working conditions. In a study comparing not-for-profit and for-profit child care in

Blau’s (2000) measure of quality contains 32 items characterizing personal care routines, furnishings,
language-reasoning experience, fine and gross motor activities, creative activities, and social development.
54

63

Canada, Cleveland et al. (2007) analyzed four Canadian datasets and found the “non-profit
child care centres have frequently been found to be, on average, of better quality thanfor-profit.”

3.4 | Fertility and Birth rates
In this subsection. we briefly review the literature that has investigated the links between theavailability of affordable child care and fertility both for first-time parents and for parents deciding
to have more than one child. This allows us to put into context the degree to which increasing
birth rates in Canada could be a possibility through an expansion of child care spaces.
In a recent literature review, Scherer et al. (2023) re-examine the international evidence to study
the link between child care accessibility and fertility. As the authors mention, the cross-country
studies conducted in the early 2000s did not discover strong association between fertility andchild care availability (Gauthier, 2007; Sleebos, 2003; Thévenon, 2009; Thévenon & Gauthier,2011). Studies that focus on single countries have found mixed results as well. For example,
Bauernschuster et al. (2015) investigated the major German child care reform and discoveredthat increases in public child care have significant positive effects on fertility. They further findthat the fertility effects are more pronounced at the intensive than at the extensive margin (i.e.
inducing parents to have additional children as opposed to becoming parents for the first time)and are not driven by changes in the timing of births or selective migration.55 Specifically,
the results of this study suggest that increasing formal child care coverage for children by
10 percentage points leads to an increase in the birth rate in year (current year when womenare eligible for universal child care) by 2.7 per cent of the sample mean and 2.8 per cent of thesample mean in year t+1 (one year after eligibility).
In the UK, Schaffnit and Sear (2017) identify a negative association between the use of paidchild care and the transition to a second child across various socio-economic backgrounds.
This result may be driven by a selection mechanism (higher income mothers being more likely
to use paid child care and less likely to have more than one child). It is also likely that mothers
who use paid child care have stronger labour force attachment (particularly because they arealso shown to be more educated and have higher income in the study) and are therefore lesslikely to have additional children.
Scherer et al. (2023) obtained evidence for limited positive effects of formal child care services
on fertility in Italy. The authors find a statistically significant and positive association between
the lagged increase in public regional child care usage and the likelihood of having one or morechildren for specific age groups.56 However they, conclude that their results do not support“strong claims about a generalized positive effect of child care on the transition to parenthoodor higher-parity births can thus be made for the Italian context”.

Outside of Europe, the studies in Japan and the United States also do not obtain significant
causal estimates for the increase in child care spaces on fertility. In Japan, Fukai (2017) finds
a positive effect of child care availability on birth rates but only limited to women who live inregions with high female labour force participation. However, Lee and Lee (2014) and Nakajima
and Tanaka (2014) do not find any strong evidence supporting these findings in Japan. In the
United States, Blau and Robins (1989) established a negative association between child carecosts and fertility for women outside of the labour force, but did not uncover any suchsignificant relationship between child care subsidies on fertility timing for employed women.
Based on the inconclusive findings of this literature, we cannot confidently forecast what theactual impact of the expansion of child care spaces could be on the birth rates of Canadian
women. We hope that more studies research this very important topic in future, especially incountry like Canada where both persistent declining birth rates and expansion of universal
child care coverage are coinciding.

4 | Conclusion
Given the federal government’s commitment to providing universal and affordable child carethrough the CWELCC agreements, and in the aftermath of pandemic-related labour shortages
in the sector, YMCA Canada proposed raising the wages of qualified ECEs by 25 per cent. In thisstudy, we examined this proposal by reviewing the state of the child care sector in Canada andpaid particular attention to the link between ECE compensation and the labour supply in thismarket. The findings obtained from literature that have studied the labour supply of ECEs
indicate that this labour supply is elastic. Therefore, raising ECE pay can induce a significant
labour supply increase in the sector, both on the intensive and extensive margins. We consider
a range of labour supply responses based on the reported elasticities in the literature and findthat even under the most pessimistic scenario, the proposal will theoretically be able to attract
enough ECEs to staff the desired number of additional spaces outlined in CWELCC framework.
However, it is worth noting that there are numerous operational challenges and constraints
that will also need to be addressed to implement the Canada-wide universal child care program.
First, the post-secondary education system in Canada will need to markedly increase its capacity
to graduate new ECEs. This may be achieved by colleges and universities as well as different
layers of government working in tandem to expand the capacity of ECE programs offered atthese educational institutions (i.e. increase the supply of ECE training). On top of that, moreneeds to be done to attract more students into this field. Certainly, raising the wages paid toqualified ECEs will be beneficial in this respect. However, as Lue and Davey (2022) discuss indetail, other important factors such as enhanced career opportunities, more generous benefits
and compensation packages and greater social recognition play a major role.

i.e. families intentionally migrating within the country in order to be eligible for child benefits.
As the authors explain, a 0.3 per cent increase in the probability of having a first child for women aged 20–29,
and smaller effects observed among men aged 45–49, and for the second child for women aged 45–49.
55

56

64

65

Federal and provincial governments can positively contribute to the increase in the supply of
ECEs in more innovative ways. One possibility is to create pathways for immigrants with formal
ECE training to join the labour force and help alleviate the shortages in this sector. British
Columbia’s Provincial Nominee Program (BC PNP) skills immigration program is a good
example. By allowing graduates of ECE programs to apply for permanent residency, the province
encourages international students to stay in the province and join its ECE workforce. In addition,
this has the potential to incentivize more international students to apply for ECE programs in thefirst place and increase the pool of ECEs in Canada. Lastly, as discussed in Section 1, this sector isheavily women-dominated (96 per cent). Another possible way to increase the supply of labour inchild care is to promote greater participation of men in this field as advocated by Reeves (2022).

backgrounds) who were able to obtain access to low-fee spaces benefited considerably interms of these developmental outcomes. This highlights the essential role that equality ofaccess plays in shaping the outcomes desired in the context of child development. We alsofind evidence that shows that quality of care can remarkably improve because of the increasein the qualifications of ECEs and higher retention rates that raising the ECE wages can bring.
Lastly, the evidence for fertility and birth rate improvements was mixed. Thus, we are not able
to predict as to what the effects (if any) on fertility and birth rates attributable to additional
investment in the ECEC sector will be and call for further studies on this very interesting topic.

The report then turns to estimating the return on investment for the additional public expenditure
required to raise the wages of ECEs. At an estimated price tag of $1.2 billion, the proposal adds
extra cost to a program that is seemingly quite costly (the estimated cost for the Canada-wide
early learning program is around $30 billion over 5 years). We first start by estimating thepotential increase in the mother’s labour force participation if the additional 250,000 spaces
promised by the federal government are fully staffed by qualified ECEs. We find that if the resultsof Quebec’s child care program carry over to the rest of Canada, the labour force participation
rate of mothers with children aged 1 to 4 can increase by an annual average of 1.68 percentage
points or 8.40 percentage points over the implementation of the program. Alternatively, ananalysis of the potential uptake of child care for mothers 25 to 54-year-old with young children
in Canada shows that their labour force participation can increase by an annual average 1.51
percentage points or 7.54 percentage points over the duration of the program’s phase-in period.
Using Fortin et al. (2012) methodology, we estimate the total economic returns caused by
the increase in maternal labour force participation channel which is estimated to generate an
additional 110,978 jobs over the program’s implementation. The estimated annual economic
returns are between 1.88 dollars to 2.06 dollars for each dollar spent on expanding child carespaces through raising ECE wages. We acknowledge that these estimates are likely upper boundsof these returns as we had to ignore some key practical issues such as capital costs required forthe expansion of child care spaces and the bottleneck of qualified ECE labour supply createdat the post-secondary education system. However, this study demonstrates that there areconsiderable unrealized social gains (even within a relatively short time frame) that can bemade by investing in the supply of child care.
We finally provide an assessment of the long-run social benefits of higher ECE pay basedon Canadian and international evidence along multiple dimensions including children’sdevelopment, human capital formation and later life outcomes; quality of care; fertility andbirth rates. The evidence on child development and human capital formation highlights theimportance of the child care program design and demonstrates that there can be someconcerns about a universal child care program, particularly if the program is suffering froma lack of qualified staff and is not flexible enough to accommodate children and parents withspecial needs. However, in almost all studies, children (particularly those from disadvantaged

66

67

References
Akai, Yukiko, and Akiei Jibiki. (2021) “An Analysis of the Labor Supply of Childcare Providers.”
Working Paper, Japanese Economic and Social Research Institute.
Azar, J. A., Berry, S. T., & Marinescu, I. (2022) “Estimating Labor Market Power” NBER Working
Paper , No. w30365, NBER.
Baker, M., Gruber, J., & Milligan, K. (2008) “Universal Child Care, Maternal Labor Supply,and Family Well-being.” Journal of Political Economy, Vol. 116, No. 4, pp. 709–745.
https://doi.org/10.1086/591908
Baker, M., Gruber, J., & Milligan, K. (2019) “The Long-run Impacts of a Universal Child Care
Program.” American Economic Journal: Economic Policy, Vol. 11, No. 3, pp. 1–26.
https://doi.org/10.1257/pol.20170603
Bassok, D., Finch, J. E., Lee, R., Reardon, S. F., & Waldfogel, J. (2016) “Socioeconomic Gaps in Early
Childhood Experiences.” AERA Open, Vol. 2, No. 3. https://doi.org/10.1177/2332858416653924
Bauernschuster, S., & Schlotter, M. (2015) “Public Child Care and Mothers’ Labor Supply—
Evidence from Two Quasi-experiments.” Journal of Public Economics, Vol. 123, pp. 1–16.
https://doi.org/10.1016/j.jpubeco.2014.12.013
Beach, J., Friendly, M., Nguyen, n.t., Borges Nogueira, P., Taylor, M., Mohamed, s., Rothman, l. &Forer, B. (2023) “Early Childhood Education and Care in Canada 2021.” Childcare Resource andResearch unit.
Blau, D. M., & Robins, P. K. (1989). “Fertility, Employment, and Child-care Costs.” Demography,
Vol. 26, pp. 287–299.
Blau, D. M. (1993) “The Supply of Child Care Labor.” Journal of Labor Economics, Vol. 11, No. 2,
pp. 324–347. https://doi.org/10.1086/298299
Blau, D. M. (2000) “The Production of Quality in Child-care Centers: Another Look.”
Applied Developmental Science, Vol. 4, No. 3, pp. 136-148.
Blau, D. M. (2001) “Child Care Problem: An Economic Analysis.” Russell Sage Foundation.
Brilli, Y., Del Boca, D., & Pronzato, C. D. (2016) “Does Child care Availability Play a Role inMaternal Employment and Children’s Development? Evidence from Italy.” Review of
Economics of the Household, Vol. 14, pp. 27-51.
Brodeur, A. and Connolly, M. (2013) “Do Higher Child Care Subsidies Improve Parental Wellbeing? Evidence from Quebec’s Family Policies.” Journal of Economic Behavior and Organization,
Vol. 93, pp. 1–16.

68

Bryant, D., Yazejian, N., Jang, W., Kuhn, L., Hirschstein, M., Hong, S. L. S., & Wilcox, J. (2023)“Retention and Turnover of Teaching Staff in a High-quality Early Childhood Network.”
Early Childhood Research Quarterly, Vol. 65, pp.159-169.
Borowsky, J., Brown, J., Davis, E., Gibbs, C., Herbst, C., Sojourner, A., Tekin, E., & Wiswall, M.
(2022) “An Equilibrium Model of the Impact of Increased Public Investment in Early Childhood
Education.” NBER Working Paper, No. 30140. https://doi.org/10.3386/w30140
Camelo, R., & Ponczek, V. (2021) “Teacher Turnover and Financial Incentives inUnderprivileged Schools: Evidence from a Compensation Policy in a Developing Country.”
Economics of Education Review, Vol. 80, No. 102067, February 2021.
https://doi.org/10.1016/j.econedurev.2020.102067
Cascio, E. U., & Schanzenbach, D. W. (2013) “The Impacts of Expanding Access to High-quality
Preschool Education”, NBER Working Paper, No. w19735, NBER.
Centre for Spatial Economics. (2009) “Literature Review of ECEC Labour Market: Understanding
and Addressing Workforce Shortages in Early Childhood Education and Care (ECEC) Project.”Ottawa: Child Care Human Resources Sector Council.
Charters, T., Findlay, L. “Characteristics of Child care Centres Serving Children Aged 0 to 5 Years
in Canada, 2021 to 2022,” Statistics Canada. Ottawa. Retrieved from https://policycommons.net/
artifacts/4249970/characteristics-of-child-care-centres-serving-children-aged-0-to-5-years-incanada-2021-to-2022-by-thomas-j/5058869/
Choi, Y., & Frank, K. (2023) “Diversity, Economic Characteristics, and Retention of Early Learning
and Child Care Workers in Canada.” Journal of Research in Childhood Education, pp. 1–19.
https://doi.org/10.1080/02568543.2023.2232832
Cleveland, G., & Krashinsky, M. (1998) “The Benefits and Costs of Good Child Care.” Departmentof Economics, University of Toronto at Scarborough.
Cleveland, G. H., & Hyatt, D. E. (2002) “Child Care Workers’ Wages: New Evidence on Returns to
Education, Experience, Job Tenure and Auspice.” Journal of Population Economics, Vol. 15, No.3,
pp. 575–597. https://doi.org/10.1007/s001480100106
Cleveland, G., Gunderson, M., & Hyatt, D. (2003) “Union Effects in Low-wage Services:
Evidence from Canadian Childcare.” ILR Review, Vol. 56, No. 2, pp. 295–305.
https://doi.org/10.1177/001979390305600205
Cleveland, G., & Krashinsky, M. (2004) “The Quality Gap: A Study of Nonprofit and Commercial
Child care Centres in Canada.” Division of Management, University of Toronto at Scarborough.

69

Cleveland, G., Forer, B., Hyatt, D., Japel, C., & Krashinsky, M. (2007) “Final Report: An Economic
Perspective on the Current and Future Role of Nonprofit Provision of Early Learning and Child
Care Services in Canada.” Child Care Resource and Research Unit.
Cleveland, G., Forer, B., Hyatt, D., Japel, C., & Krashinsky, M. (2008) “New Evidence About Childcare in Canada: Use Patterns, Affordability and Quality.” Institute for Research on Public Policy.
Cleveland, G. (2023) “How Much Will It Cost to Raise the Wages of Early Childhood Educators?”
Childcarepolicy.net. https://childcarepolicy.net/how-much-will-it-cost-to-raise-the-wages-ofearly-childhood-educators/
Clifford, R. M., Reszka, S. S., & Rossbach, H. (2010) “Reliability and Validity of the Early Childhood
Environment Rating Scale.” Chapel Hill: University of North Carolina, FPG Child Development
Institute.
Cornelissen, T., Dustmann, C., Raute, A., & Schönberg, U. (2018) “Who Benefits from
Universal Child Care? Estimating Marginal Returns to Early Child care Attendance.” Journalof Political Economy, Vol. 126, No. 6, pp. 2356–2409. https://www.journals.uchicago.edu/
doi/10.1086/699979

Fairholm, R., & Davis, J. (2012) “Canadian ECEC Labour Shortages: Big, Costly and Solvable.”Childcare Markets, pp. 153–172. https://doi.org/10.46692/9781847429353.009
Fitzpatrick, M. D. (2010) “Preschoolers Enrolled and Mothers at Work. The Effects of Universal
Prekindergarten.” Journal of Labor Economics, Vol. 28, No. 1.
Flanagan, K., Beach, J., Michal, D., & Cormier, S. (2009). (rep.) “Pathways to Early Childhood
Education Credentialing in Canada.” Child Care Human Resources Sector Council, Ottawa, Canada.
Fortin, P., Godbout, L., & St-Cerny, S. (2012) “Impact of Quebec’s Universal Low Fee Childcare
Program on Female Labour Force Participation, Domestic Income, and Government Budgets.”
University of Sherbrooke, Working Paper, No. 2012/02.
Frank, K., & Arim, R. (2021) “Indigenous and Non-Indigenous Early Learning and Child care
Workers in Canada.” Economic and Social Reports, Vol. 1, No. 8, pp. 1–13, Catalogue
No. 36-28-001.
Fukai, T. (2017) “Childcare Availability and Fertility: Evidence from Municipalities in Japan.”
Journal of the Japanese and International Economies, Vol 43, pp. 1–18.

Cross, P. (2024) “Is the Federal Daycare Program Achieving Its Stated Goals?” Fraser InstituteResearch Bulletin, February 2024.

Garcia-Vazquez, M. (2023) “The Equilibrium Effects of State-Mandated Minimum Staff-to-Child
Ratios.” Working Paper.

Cryer, D., Wagner-Moore, L., Burchinal, M., Yazejian, N., Hurwitz, S., & Wolery, M. (2005)“Effects of Transitions to New Child Care Classes on Infant/Toddler Distress and Behavior.”
Early Childhood Research Quarterly, Vol. 20, No. 1, pp. 37-56.

Gauthier, A. H. (2007) “The Impact of Family Policies on Fertility in Industrialized Countries:
A Review of the Literature.” Population Research and Policy Review, Vol. 26, No. 3, pp. 323–346.

Cunha, F., & Lee, M. (2023) “One Says Goodbye, Another Says Hello: Turnover and Compensationin the Early Care and Education Sector.” NBER Working Paper, No. 31869, NBER.
https://doi.org/10.3386/w31869
Currie, J., & Almond, D. (2011) “Human Capital Development Before Age Five” Handbook ofLabor Economics, pp. 1315–1486. https://doi.org/10.1016/s0169-7218(11)02413-0
Department of Finance. (2021) “Budget 2021: A Canada-wide Early Learning and Child Care Plan.”
Ottawa, Canada.
Dietrichson, J., Lykke Kristiansen, I., & Viinholt, B. A. (2020) “Universal Preschool Programs andLong-term Child Outcomes: A Systematic Review.” Journal of Economic Surveys, Vol. 34, No.5,
pp. 1007-1043.
Doherty, G , Goelman, H., Lero, D. S., LaGrange, A., & Tougas, J. (2000) “Caring and Learning
Environments: Quality in Child Care Centres across Canada. You Bet I Care!” Centre for Families,
Work and Well-Being, University of Guelph, Guelph, Ontario, Canada.

Gray-Lobe, G., Pathak, P. A., & Walters, C. R. (2022) “The Long-term Effects of Universal Preschool
in Boston.” The Quarterly Journal of Economics, Vol. 138, No. 1, pp. 363–411.
https://doi.org/10.1093/qje/qjac036
Graziano, P. A., Garb, L. R., Ros, R., Hart, K., & Garcia, A. (2016) “Executive Functioning andSchool Readiness Among Preschoolers with Externalizing Problems: The Moderating Role of theStudent-teacher Relationship.” Early Education and Development, Vol. 27, No. 5, pp. 573–589.
https://doi.org/10.1080/10409289.2016.1102019
Goldin, C. (2014) “A Grand Gender Convergence: Its Last Chapter.” American Economic Review,Vol. 104, No. 4, pp. 1091-1119.
Haeck, C., Lefebvre, P., & Merrigan, P. (2015) “Canadian Evidence on Ten Years of Universal
Preschool Policies: The Good and the Bad.” Labour Economics, Vol. 36, pp. 137–157.
https://doi.org/10.1016/j.labeco.2015.05.002
Hardoy, I., & Schøne, P. (2015) “Enticing Even Higher Female Labor Supply: The Impact ofCheaper Day Care.” Review of Economics of the Household, Vol .13, pp. 815-836.

Doherty, G., Friendly, M., & Forer, B. (2002) “Child Care by Default or Design? An Exploration ofDifferences.” Occasional Paper, No. 18. University of Toronto: Childcare Resource & Research
Unit, Centre for Urban & Community Studies.
70

71

Havnes, T., & Mogstad, M. (2011a) “Money for Nothing? Universal Child Care and Maternal
Employment.” Journal of Public Economics, Vol. 95, No. 11–12, pp. 1455–1465.
https://doi.org/10.1016/j.jpubeco.2011.05.016

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, Vol. 16, No. 5, pp. 490-502.

Havnes, T., & Mogstad, M. (2011b) “No Child Left Behind: Subsidized Child Care and Children’sLong-run Outcomes.” American Economic Journal: Economic Policy, Vol. 3, No. 2, pp. 97–129.
https://doi.org/10.1257/pol.3.2.97

Lue, J., & Davey, K. (2023) “An Investment that Works for Child Care.” Public Policy Forum.
https://ppforum.ca/publications/an-investment-that-works-for-child-care/

Havnes, T., & Mogstad, M. (2015) “Is Universal Child Care Leveling the Playing Field?” Journal of
Public Economics, Vol. 127, pp. 100–114. https://doi.org/10.1016/j.jpubeco.2014.04.007
Huntsman, L. (2008) “Determinants of Quality in Child Care: A Review of the Research Evidence.”
New South Wales: Department of Community Services. Retrieved 12-01-2022.
ISQ-Institut de la statistique du Québec (2004) “Québec Survey on the Quality of Educational
Daycare in 2003,”. http://www.grandirenqualite.gouv.qc.ca/grandir_qualite_an.htm.

Macdonald, D., & Friendly, M. (2023) “Not Done Yet: $10-a-day Child Care Requires
Addressing Canada’s Child Care Deserts.” The Canadian Centre for Policy Alternatives.
https://policyalternatives.ca/publications/reports/not-done-yet
Manning, M., Garvis, S., Fleming, C., & Wong, G. T. (2017) “The Relationship Between Teacher
Qualification and the Quality of the Early Childhood Education and Care Environment.”
Campbell Systematic Reviews, Vol.13, No.1, pp. 1-82.

Japel, C., Tremblay, R. E., & Côté, S. (2005). “Quality Counts. “ Choices, Vol. 11, No. 5, pp. 1-42.

McCuaig, K., Akbari, E., & Correia, A. (2022) “Canada’s Children Need a Professional
Early Childhood Education Workforce.” Atkinson Centre, University of Toronto, Toronto,
Canada, April.

Japel, C., & Friendly, M. (n.d.) “Inequalities in Access to Early Childhood Education and Care in
Canada.” https://childcarecanada.org/documents/research-policy-practice/19/02/inequalities-access-early-childhood-education-and-careMilligan, K., & Stabile, M. (2011) “Do Child Tax Benefits Affect the Well-being of Children?
Evidence from Canadian Child Benefit Expansions.” American Economic Journal: Economic
Policy, Vol. 3, No. 3, pp. 175-205.

Karoly, L. A., Strong, A., & Doss, C. J. (2023) “Vermont Early Care and Education Financing Study.”
Santa Monica, CA: RAND Corporation, January 2023. https://www.rand.org/pubs/research_reports/RRA2213-1.html.

Molnar, T. L. (2023) “Costs of Daycare, Complementarities, and Heter ogeneous Productivityof Parenting Time in Child Skill Formation.” Working Paper.

Katz, L. G. (1992) “Multiple Perspectives on the Quality of Early Childhood Programmes.”
European Early Childhood Education Research Journal, Vol. 1, No. 2, pp. 5-9.
Kottelenberg, M. J. and Lehrer, S. F. (2013) “New Evidence on the Impacts of Access to andAttending Universal Child-Care in Canada.” Canadian Public Policy, Vol. 39, No. 2, pp. 263–286.
Kottelenberg, M. J. and Lehrer, S. F. (2018) “Targeted or Universal Coverage? Assessing
Heterogeneity in the Effects of Universal Child Care.” Journal of Labor Economics, Vol. 35,
No. 3, pp. 609–653.
Lee, G. H., & Lee, S. P. (2014) “Childcare Availability, Fertility and Female Labor Force Participationin Japan.” Journal of the Japanese and International Economies, Vol. 32, pp. 71–85.
Lefebvre, P., & Merrigan, P. (2008) “Child-care Policy and the Labor Supply of Mothers with YoungChildren: A Natural Experiment from Canada.” Journal of Labor Economics, Vol. 26, No. 3, pp.
519–548. https://doi.org/10.1086/587760.

Montpetit , Sébastien. (2023) “A Welfare Analysis of Universal Childcare: Lessons froma Canadian Reform” : Job market paper.
Morrissey, T. W. (2016) “Child Care and Parent Labor Force Participation: A Review of the
Research Literature.” Review of Economics of the Household, Vol. 15, No. 1, pp. 1–24.
https://doi.org/10.1007/s11150-016-9331-3.
Nakajima, R., & Tanaka, R. (2014) “Estimating the Effects of Prenatal Policies on Residential Choiceand Fertility.” Journal of the Japanese and International Economies, Vol. 34, pp. 179–200.
Nollenberger, N., & Rodríguez-Planas, N. (2015) “Full-time Universal Childcare in a Context
of Low Maternal Employment: Quasi-experimental Evidence from Spain.” Labour Economics,
Vol. 36, pp. 124-136.
Peters, R. D., Bradshaw, A. J., Petrunka, K., Nelson, G., Herry, Y., Craig, W. M., & Rossiter, M. D.
(2010) “The Better Beginnings, Better Futures Project: Findings from Grade 3 to Grade 9.” Wiley.
Prentice, S. (2007). “Rural Childcare: Childcare as Economic and Social Development in Parkland.”Child Care Coalition of Manitoba.

72

73

Ransom, M. R., & Sims, D. P. (2010) “Estimating the Firm’s Labor Supply Curve in a “New
Monopsony” Framework: School Teachers in Missouri.” Journal of Labor Economics, Vol.28,
No. 2, pp. 331-355.

Statistics Canada. (2023) “Characteristics of Child Care Centres Serving
Children Aged 0 to 5 years in Canada, 2021 to 2022.” Government of Canada.
https://www150.statcan.gc.ca/n1/pub/36-28-0001/2023003/article/00001-eng.htm

Reeves, R. (2022) “Of Boys and Men: Why the Modern Male is Struggling, why it Matters,
and what to Do about it.” Brookings Institution Press.

Stremmel, A. J., Benson, M. J., & Powell, D. R. (1993) “Communication, Satisfaction, andEmotional Exhaustion among Child Care Center Staff: Directors, Teachers, and Assistant
Teachers.” Early Childhood Research Quarterly, Vol. 8, No. 2, pp. 221-233.

Robinson, C. (2011) “Occupational Mobility, Occupation Distance and Specific Human Capital.”
CIBC Centre for Human Capital and Productivity. CIBC Working Papers, 2011-5. London, ON:
Department of Economics, University of Western Ontario.
Rothstein, J. (2015) “Teacher Quality Policy When Supply Matters,” American Economic Review,Vol. 105, No. 1, pp. 100–130.
Schaffnit, S. B., & Sear, R. (2017) “Support for New Mothers and Fertility in the United Kingdom:
Not All Support is Equal in the Decision to Have a Second Child.” Population Studies, Vol. 71,
No. 3, pp. 345–361. https://doi.org/10.1080/00324728.2017.1349924
Scherer, S., Pavolini, E., & Brini, E. (2023) “Formal Childcare Services and Fertility: the Caseof Italy. ” Genus, Vol. 79, No. 1, pp. 29.
Seward, B., Dhuey, E., & Pan, A. (2023) “The Big Short: Expansion of Early Childhood
Education in Post-pandemic Canada.” Canadian Public Policy, Vol. 49, No. 3, pp. 306–329.
https://doi.org/10.3138/cpp.2022-059
Sleebos, J.E. (2003) “Low Fertility Rates in OECD Countries: Facts and Policy Responses.”
pp. 1–62. OECD social, employment and migration working papers.
Sokolova, A., & Sorensen, T. (2021) “Monopsony in Labor Markets: A Meta-analysis.” ILR Review,Vol. 74, No. 1, pp.27-55.
Spiker, D., Hebbeler, K. M., & Barton, L. R. (2011) “Measuring Quality of ECE Programs for Children
with Disabilities.” In M. Zaslow, I. Martinez-Beck, K. Tout & T. Halle (Eds.), Quality Measurement in
Early Childhood Settings, pp. 229-256. Washington, DC: Brookes Publishing.

“The Care Economy Data Room: Early Learning & Childcare.” Second Edition, November
2021. https://thecareeconomy.ca/wp-content/uploads/2021/11/The-Care-Economy-DataRoom-2nd-Edition-ELCC-Nov1_2021.pdf
Thévenon, O. (2009) “Does Fertility Respond to Work and Family-life Reconciliation Policies
in France?” Fertility and Public Policy. https://hal.science/hal-00424832/
Thévenon, O., & Gauthier, A. H. (2011) “Family Policies in Developed Countries: A ‘Fertilitybooster’ with Side-effects.” Community, Work and Family, Vol. 14, No. 2, pp. 197–216.
https://doi.org/10.1080/13668803.2011.571400
Totenhagen, C. J., Hawkins, S. A., Casper, D. M., Bosch, L. A., Hawkey, K. R., & Borden, L. M. (2016)“Retaining Early Childhood Education Workers: A Review of the Empirical Literature.” Journal of
Research in Childhood Education, Vol. 30, No. 4, pp. 585-599.
Uppal, S., & Savage, K. (2021) “Child Care Workers in Canada.” Statistics Canada. https://www150.
statcan.gc.ca/n1/en/pub/75-006-x/2021001/article/00005-eng.pdf?st=yF0nQ8lw
Webber, D. A. (2016) “Firm-level Monopsony and the Gender Pay Gap.” Industrial Relations:
A Journal of Economy and Society, Vol. 55, No. 2, pp. 323-345.
Zhang S, Garner R, Heidinger L, Findlay L. (2021) “Parents’ Use of Child care Services andDifferences in Use by Mothers’ Employment Status.” Statistics Canada. https://www150.statcan.
gc.ca/n1/pub/75-006-x/2021001/article/00007-eng.htm

Statistics Canada. (2022a) “Gender Differences in Sociodemographic and Economic
Characteristics of Early Learning Child Care Workers.” Government of Canada.
https://doi.org/10.25318/36280001202200100001-ENG
Statistics Canada. (2022b) “Survey on Early Learning and Child Care Arrangements, 2022”,
The Daily. https://www150.statcan.gc.ca/n1/daily-quotidien/220601/dq220601a-eng.htm
Statistics Canada. (2023a) “Estimates of Parental Child Care Expenses in January to February
2022.” Government of Canada. https://doi.org/10.25318/36280001202300700001-ENG

74

75

Appendix A: Comprehensive Literature Reviewof the Labour Supply Elasticity of ECEs
Blau (1993) was the first to document the labour supply elasticity of ECEs using samples of female
child care workers , other female workers,57 and female non-workers from the March Current
Population Surveys (CPS) in the United States for 1977-87. Using a structural joint model of sector
choice and hours of work, the author estimates that a 1 per cent increase in the wages58 of ECEs
increases the probability of women joining the ECEC sector by 0.83 per cent without controllingfor state dummies and 1.20 using state dummies controls.59 This can be interpreted as theextensive margin60 of the elasticity of labour supply. In terms of total hours of work in the
ECEC sector, a 1 per cent increase in the wage rate, increases the total annual hours of workby 0.313 per cent without controlling for differences between U.S. states and 0.714 per centusing state controls. This provides a range for the intensive margin of the elasticity of labour
supply. This means that the overall elasticity of ECE’s labour supply is between 1.15 and 1.94.
In a subsequent paper, Blau (2001) extends the observation period to 1998 and finds an elasticity
of 0.73 for the extensive margin of labour supply and an elasticity of 0.42 for the intensive margin(hours of child care work), corresponding to an overall labour supply elasticity of 1.15.
While not providing elasticity estimates, a Canadian study by Fairholm and Davis (2014) foundthat from 2001 to 2008, total employment in the ‘Child Day-Care Services’ industry increased
by 36.8 per cent compared with an increase of 15.0 per cent in total industrial employment
while average weekly earnings (including overtime) for all employees in the ECEC sector roseby 21.4 per cent.
More recently, Garcia-Vazquez (2023) used an instrumental variables approach to estimate thelabour supply elasticities of lead teachers and child care workers in the U.S.61 Utilizing lagged
fertility rates (a 2-year lag) at the state level as an instrument for the ECE labour supply shifters,
he finds an extensive margin elasticity of 1.33 for Lead teachers and 1.58 for Childcare workers.

All female child care workers between the ages of 18 and 64 (inclusive) and a random subsample of all other womenin the same age range. The final sample consisted of 4,305 child care workers, 7,180 other workers, and 3,710 nonworkers.
58
To be clear, in this framework, the wage rate that woman j could earn in sector i, i = 2 (Childcare), 3(Other sectors),
is Wij= πi * tij where π is the skill price and t is skill endowment. The elasticities reported in this paper are with respect
to skill price π.
59
The state controls can potentially capture some of legal differences between states especially as it related to the
ECEC sector.
60
The extensive margin refers to the decision of women joining the ECEC sector, either from other sectors or from
non-employment, in response to increases in the ECEs wages while the intensive margin means adjustment of working hours of the existing ECEs in response to the said wage increases.
61“The primary function of lead teachers is to work with parents, administrators, and other teachers to improve students’ experience and meet teaching objectives. Additionally, lead teachers plan, evaluate, and improve the physicalenvironment of the classroom to create opportunities that meet the changing needs of the developing child. Lead
teachers can work at a preschool, child care center or elementary school.”- https://www.glassdoor.ca/employers/
Job-Descriptions/Lead-Teacher

In another very recent contribution, Cunha, and Lee (2023) use the Texas Education ResearchCenter (ERC) database which provides longitudinal and student-level data from 1994 to thepresent to estimate a dynamic discrete-choice model of schooling, labour supply and home
production. Their main parameters of interest are the elasticities of labour supply and turnoverfor ECEs. The authors use their model estimates to evaluate policies that provide bonuses for
ECEs representing 1 per cent to 50 per cent of their labour income62 and find that a 25 per centearnings bonus that would cause a 50 per cent increase in employment in the ECEC sector.
This elasticity accelerates as the relative magnitude of the bonus increases. Therefore, as Figure
1 shows the increase in ECE employment function (as a function of the increase in bonus pay)
is convex and in fact it doubles before the increase in bonus reaches the 50 per cent threshold.
This is a very key finding because it implies that the overall elasticity of labour supply in the ECEC
sector is not constant and could vary based on the wage increases in the ECEC sector relative
to other sectors. Figure 2 depicts the relationship between the elasticity of labour supply withrespect to earnings and the per cent increase in the earnings of ECEs.
Another intriguing feature of the model developed in this paper is that it allows the authors toinvestigate the different schemes of wage supplementation and estimate the composition of
the workers that will be attracted to the ECEC sector by each scheme. They simulated two
policies that reflect the wage supplementation programs implemented in Virginia and Texas.63
The first policy is to offer a static $1,500 bonus64 to ECEs in every period, similar to a signingbonus. The second one is $1,500 bonus conditional on having worked in the ECEC sector in
the previous period (year), akin to a retention award.
The static bonus substantially impacts recruitment into the ECEC sector as it increases theshare of ECEs who work in the sector for at least three months, by about 14%. In contrast, thedynamic bonus has negligible effects on recruitment. These two policies also attract a different
composition of movers. As Table A1 shows, the static bonus attracts more workers who would
be in the Health and Education (HE)65 sector without this intervention. However, the dynamic
bonus attracts workers from all industries uniformly.

57

76

The bonuses they consider are static in the sense that they do not incorporate these increases to future wage
increases. This means that an individual choosing in period t whether to work in the ECEC Sector incorporates thebonus in their decision making, but does consider that the bonus will also occur in periods a + 1, . . ., A.
63
In 2019, Virginia was awarded a federal Preschool Development Birth through Five Initial Grant (PDG) and thestate began a set of efforts to increase access to stable, affordable, and high-quality ECE. The program in Virginia
was uniform across the state. In Texas, these programs were initiated by the State using funds allocated by theChild Care and Development Block Grant (CCDBG) Act of 2014. The State requested each region to develop
a wage supplementation plan for ECEs with values ranging from $120 to $3,900 bonuses per staff per year.
These bonuses represent between 0.5 per cent and 15.6 per cent of the yearly earnings of child care programs
reported by the Bureau of Labor Statistics.
64
This amount is 17 per cent of the ECE wages in the sample that Cunha and Lee (2023) use.
65
As ECEs are part of the HE sectors, these would be workers in the HE sector who are not employedworking as ECEs.
62

77

Table A1: The Effects of Different Bonus Schemes on Attracting Educators from Various Sources
Sector in Baseline

Static $1,500 Bonus

Dynamic $1,500 Bonus

Others

19.3%

30.1%

HE

54.9%

23.1%

School

20.7%

22.4%

Home

5.1%

24.4%

Figure 3:The Relationship between the Elasticity of Labour Supply and the per centIncrease in the ECE Earnings

Note: “This table shows which sectors individuals would be in the absence of counterfactual wage
supplementation programs. The per centages denote which sector they come from due to the policy.”
Source: Cunha and Lee (2023)- Table 11

Turnover Elasticity with Respect to Wages
The authors are also able to estimate the elasticity of turnover within this framework. Figure 3
below illustrates the changes in the turnover with wage increases. The turnover elasticity isreasonably constant and around 0.5, which makes it inelastic. This implies that for example,
a 20 per cent increase in earnings reduces turnover by 10 per cent. In addition, this elasticity
does not change with age.
Table A1: The Effects of Different Bonus Schemes on Attracting Educators from Various Sources

Note: The dashed line represents the 45 degrees line
Source: Cunha and Lee (2023)- Figure 6
78

Source: Author’s calculations based on Figure 1

Figure 3: Impact of an Increase in ECE Earnings on TurnoverNote: The upper dashed line represents the 45 degrees line
Source: Cunha and Lee (2023)- Figure 7
79

The paper also reports the impact on turnover and duration of employment of ECEs
under each wage supplementation scheme. Table A2 summarizes the results.

Table A1: The Impact of Different Bonus Pay Schemes on Duration of Employment,
Turnover and Accumulated experience of ECEs

Baseline
Value

Static$1,500 Bonus(% Change)

Conditional$1,500 Bonus(% Change)

Duration at first spell

1.95

6.12%

7.97%

Turnover at first spell

0.47-6.82%-8.18%

Accumulated Experiencein the ECE Sector

1.86

6.75%

8.22%

Note: The “Baseline” column shows the same statistics implied by the model with no policy. The second
column shows the per cent change in overall composition after a static $1,500 bonus, the third column shows
the per cent change in composition after a conditional $1,500 bonus. Duration is calculated as the number ofconsecutive years in a sector, and turnover is the fraction of individuals who leave the ECEC sector at the endof the period. Accumulated experience is the number of periods that the individual worked (consecutively ornot) in the ECEC sector by age twenty-nine years.
Source: Cunha and Lee (2023)- Table 12

Focusing on turnover, the elasticity is approximately -0.48 under the conditional (dynamic)
scheme. This estimate is 23 times smaller than the elasticity obtained by Bassok et al. (2021)
who report a turnover elasticity of -11.2 in their Randomized Controlled Trial study to assess theimpact of the 2019 program. Implemented in Virginia that offered up to a $1,500 compensation
bonus (representing an increase of 4.4 per cent) if educators in early childhood settings
remained in their position over 8 months, on turnover.66
In a related paper, Akai and Jibiki (2021) use data from the 2013 and 2018 Survey of Licensed
Childcare Providers in Tokyo to study the effects of the gradual increase in the subsidies toprivate child care providers to estimate the impact of hourly wages on intention to leave thesector. The increase in subsidy was conditional on the experience of child care teachers ineach provider and excluded public providers. Using a difference-in-difference strategy, theauthors find that the policy increased teachers’ wages by 7 per cent and reduced intention
to leave by 19 per cent. To the extent that intention to leave represents actual turnover within
a year, this result suggests a turnover elasticity of 2.7.67

Cunha and Lee (2023) attributed this disparity to the compositional differences between the older and moreeducated sample of Lead and assistant teachers considered in Bassock et al. (2021), and their younger, lesseducated sample of all ECE workers in Texas.
67
It is also possible that the intention to leave does not translate into turnover from one period to the next.

As the last study examined in this literature review, Browsky et al. (2022) propose an equilibrium
model of the impact of increased public investment in early childhood education and within
their model they choose a labour supply elasticity of 4 for ECEs without a bachelor’s degreeand 2 for ECE’s with such a degree. In driving their elasticities, they reviewed the labour
supply elasticity estimates provided in the K-12 schooling, firm-specific labour supply, andon heterogeneous labour supply elasticities literature and obtained relevant elasticities
ranging from 1 to 10, and with lower-skill occupations and better-identified studies showing
higher elasticities. Some of the papers examined include Rothstein (2015) which develops amodel of K-12 teacher labour supply and assumes labour supply elasticity of 0.5 to 1.5 at theoccupation level, Ransom and Sims (2010) who report firm labour supply elasticities of about
1.8 at the school district level and Webber (2016) who estimates an average firm labour supply
elasticity of 0.9 for women in the educational services industry. Also noted in their literature
review is the meta-analysis of Sokolova and Sorensen (2021) who obtained a firm-specific labour
supply elasticity estimate of 6.0 for women in all sectors and Azar et al. (2019) paper that finds
an implied market-level labour supply elasticity of about 0.6 with low skill occupations having
higher market-level elasticities than high skill occupations.

Appendix B: International Evidence on the Labour Supply
Response of Mothers to Child care Coverage Expansion
Havnes and Mogstad (2011a) analyze a staged expansion of subsidized child care in Norway
starting in 1970s and obtain 0.0625 percentage point increase in mother’s employment rate areaand 0.052 percentage points increase in mothers working full-time stemming from 1 percentage
point increase in child care coverage in the treatment area relative to the comparison areas.68
However, as discussed in Haeck et al. (2015), one must consider the differences between the
Norwegian reform and the policy implemented in Quebec. In Norway, only a limited numberof spaces were offered in the period investigate by Havnes and Mogstad (2011a) therefore
leading to excess demand. In addition, the policy did not cover children younger than 3 years
old, and the fees remained relatively high compared to the heavily subsidized child care network
introduced in Quebec. Their argument is somewhat supported by Hardoy and Schone (2015)
study that concerns the more recent public policy changes in Norway that decreased pricevariations among municipalities and increased child care coverage for the children between
1–5-year-olds. The study found documented an increase in maternal labour market participation
rate of mother (by 4 percentage points approximately).

66

80

To define the treatment and comparison groups, Havnes and Mogstad (2011a) order the municipalities according
to the percentage point increase in child care coverage rates from 1976 to 1979. They then separate the sample at themedian, letting the upper half constitute the treatment municipalities and the lower half the comparison municipalities.
6881

In the U.S. context, Fitzpatrick (2010) and Cascio and Schanzenbach (2013) analysed theimpact of pre-kindergarten programs similar to the Quebec policy reform and found small tonull effects on maternal labour force. Notwithstanding, these programs only affected children
aged 4 years old and the number of hours in care could not exceed 6 hours per day, comparedto 12 hours per day in the Quebec.
Studying a comprehensive child care reform in Germany, Bauernschuster and Schlotter(2015) examined a German policy that legally entitled children aged 3–6 years old to a space inkindergarten. They found that the reform led to a 14.1 per cent increase in maternal employment
and a 23.2 per cent increase in working hours. These substantial employment effects to thewere seemingly generate by the lack of private and informal child care arrangements (absenceof crowding-out) prior to the reform and the fact that children between 3-6 years old werelegally entitled to public child care.

Appendix C: Child Care Providers Data at theProvincial level
Table 1C: The Educational Requirements at Individual Staff and Program Levels forRegulated Child Care Centres, by Province

In similar studies Nollenberger and Rodrguez-Planas (2015) – in Spain—and Brilli et al. (2013) –Italy—estimate significant employment gains by mothers because of universal child care reforms.
The Spanish policy extended formal child care to 3-year-olds caused a 9.6 per cent increase in
the average employment of mothers. More relevant to the CWELLC framework, Brilli et al. (2013)
estimated the impact of child care availability on maternal employment to be 1.3 percentagechange increase for 1 in public child care coverage.

82

83

Table 2C: Total Number of Regulated Child Care Centres. Provinces/Territories/Canada(2004 – 2021)
P/T

2004

2006

2007

2008

2010

2012

2014

2016

2019

2021

NL

151

165

167

172

172

192

192

205

189

186

PE

142

131

136

144

143

102

115

119

144

150

NS

382

383

386

380

409

332

390

363

359

304

NB

357

361

384

415

491

542

605

627

673

697

QC

996

1918

1986

2020

2215

2612

2997

3249

3563

3578

ON

3874

4175

4480

4582

4803

4922

4361

5276

5523

5506

MB

567

574

583

595

635

640

666

689

713

718

SK

153

173

179

187

222

259

282

310

335

346

AB

1701

1681

1699

1739

1974

2178

2276

2402

2789

2,120 (est.)

BC1

3133

2933

3095

3280

2792

2864

2963

2932

3099

3283

YT

37

41

34

32

39

35

36

36

40

49

NT

49

51

67

67

59

59

56

64

62

68

NU

46

45

43

45

47

52

54

48

53

60

CA

11588

12631

13239

13658

14001

14789

14993

16320

17542

17065

Note: Included in child care centres are all regulated centre-based facilities—full-day, part-day and before-andafter-school child care but not family child care. In BC, the number of centres is less than the sum of individual
program categories as facilities may be licensed for more than one type of program. The total number ofcentres reported in 2004 – 2008 was the sum of the individual program categories and is not comparable tothe 2010 – 2021 numbers. Source: Early Childhood Education and Care in Canada 2021-Beach et al. (2023)

Source: Early Childhood Education and Care in Canada 2021-Beach et al. (2023)

Table 2C depicts the historical evolution of regulated child care centres across various provinces.
The most notable trend observable in this table is the rapid and persistent growth of child care
centres is Quebec relative to other provinces and the slow increase (and even stagnation) of
such spaces in other provinces from 2004 to 2021. This disparity is certainly linked to theuniversal low-fee child care reform that was enacted in Quebec in 1997. Table 3C shows thesame evolution for the regulated home-based centres. While regulated child care centres haveoverall increased in numbers. Across Canada, the number of regulated home-based centres
has fallen significantly across the country between 2004 to 2021.
To provide more context about the relative composition of centres, Appendix C, Table 4C
shows the number and percentage of centres within each province that were for-profit between
2004-2021 for regulated part- and full-day centre spaces (not centres) for 0-12-year-olds.

84

85

Table 3C: Total Number of Active Regulated Home-based Child Care Centres.
Provinces/Territories/Canada (2004 – 2021)

Table 4C: Number and Per cent of Centres and Centre Spaces for 0-12-year-olds that wereFor-profit. Provinces/Territories, 2021

P/T

Number ofcentres thatwere for-profit

Percent ofcentres that werefor-profit (%)

Number of full- andpart- day centre
spaces that werefor-profit

Percent of full- andpart- day centre
spaces that werefor-profit (%)

4

NL

116

62

5194

70

281

168

PE

88

59

3988

63

188

177

145

NS

168

55

8543

55

15514

14687

12661

9884

NB

473

68

20723

66

6142

5765

3765

3918

3210

QC

1979

56

118041

21

468

420

426

425

448

443

ON

1368

25

97929

21

269

245

243

226

238

242

MB

36

5

1810

5

2781

2042

1999

1892

1801

SK

7

2

275

2

2254

2213

2071

1700

1700

1755

AB

1244

59

87204

66

32

35

30

30

23

23

22

BC1

1859

57

61857

54

50

49

49

50

40

51

51

YT

29

59

1219

73

1

1

1

2

5

NT

0

0

0

0

27715

26623

23445

21513

17840

NU

0

0

0

0

CA

7367

43

406783

29

P/T

2004

2006

2007

2008

2010

2012

2014

2016

2019

2021

NL

35

34

61

67

77

104

104

155

119

110

PE

6

131

5

5

4

4

2

1

3

NS

34

32

37

37

94

158

224

235

NB

25

45

47

55

87

120

151

QC

13000

13776

14431

15123

15304

15448

ON

7765

7716

7524

7822

7071

MB

591

588

551

518

SK

291

290

276

275

AB

1741

2694

2694

BC

2525

2067

2097

2125

YT

43

41

39

NT

32

44

43

1

NU
CA

26088

27333

27805

26109

25712

Source: Early Childhood Education and Care in Canada 2021-Beach et al. (2023)
Note: The data includes full-day, part-day nursery school/preschool and school-age centres and centre
spaces. No data available for part-day for-profit centres (i.e., jardins d’enfants) and there are no for-profit
before-and-after school spaces, as all are operated by school authorities. Therefore, these figures only
include full-day spaces. No data available for number of school-age centres in schools, therefore theper cent of centres that were profit only includes full-day centres.
Source: Early Childhood Education and Care in Canada 2021-Beach et al. (2023)

86

87

YMCA Canada
1 Richmond Street West,
Suite 600 Toronto, ON
M5H 3W4

88ymca.ca
YMCACanada@YMCA_Canada

Centre for the Study of Living Standards
170 Laurier Avenue, Suite 604
Ottawa, Ontario K1P 5V5
613-233-8891 info@csls.ca