Does free childcare help women back to work?

Over the last 20 years, early childhood education and childcare for the under-fives has become a major policy priority in the UK. Get more mothers into work, it’s argued, and we can start to close the gap between the least and most disadvantaged children, and cut the differences in pay between men and women. Past governments have spent a lot of money on childcare and the UK is now one of the highest spenders in Europe.

But evidence on the effectiveness of this spending has been lacking. The most expensive programme provides all three and four-year-olds in England with a free, part-time, early education place at a cost of around £2 billion a year. Similar schemes operate in Wales, Scotland and Northern Ireland.

In new research with colleagues from the Institute for Fiscal Studies and the University of Essex, I have found that these hours of free childcare do make it easier for mothers to work – but not in large numbers.

Rapid expansion of childcare

Free childcare for three and four-year-olds in England was announced by the Labour government in 1998, but expanded slowly and became universal across England only in 2005. Some local authorities had already provided free nursery classes in primary schools before the 1998 announcement.

This means that some areas of England experienced a rapid expansion in the availability of free places while others saw relatively little change. In our research, we compared areas that saw a large increase in free places to those that did not, to see how extra availability of free childcare affected mothers decisions to go back to work.

No big boost in employment

We did find a link between the rise in the number of free part-time childcare places in a local authority and the change in the employment rate of mothers of three-year-olds who lived there. But the effects were not very large. Using data from the Labour Force Survey, we found that offering free childcare to an additional 10% of three-year-olds leads to a rise in the employment rate of their mothers of 0.4%. As past research has suggested, mothers of three-year-olds who have no younger children respond more, with 0.6% more moving back into employment.

We calculated the wider impact of this by using the actual rise in the number of three-year-olds in England benefitting from a free place over the past decade – which rose from around 40% to around 90%. So we estimated that the expansion of free childcare places led to a 3% rise in the employment rate of mothers whose youngest child is aged three – or an extra 12,000 mothers in work. There are around 400,000 mums whose youngest child is aged three in England.

Part-time childcare not enough

These free places are also aimed to help children thrive at school, as well as to help their mothers to work – and colleagues of mine have assessed the impact of these free places on children’s development. But assessed just as an employment policy, these are disappointing findings: spending of an estimated £700m a year on extra childcare places for three-year-olds has led to just 12,000 more women in work.

Part of the story here might be that parents were offered only a part-time childcare place – initially 2.5 hours a day, and now 15 hours a week. Many three-year-olds use their free place in a nursery class in a regular school, which leaves parents who want to work with the challenge of finding care for the rest of the working day, and in school holidays.

Good use of public money?

The free entitlement was universal, and so inevitably it benefitted some who didn’t need it. If we dig deeper into the data, our research actually shows that free childcare enabled about one in four women to go back to work who would not have done so without free childcare. But there aren’t many of these women overall: the majority of families who gained a free childcare place over the past decade – we think about five out of six – would have paid for childcare anyway.

Of course, providing free childcare to families who would have paid for childcare anyway doesn’t waste money: it improves family finances, just as child benefit does. But this research should remind us that, at a time when all major political parties are offering to spend more on childcare in the next parliament, the economic case for extending the free entitlement is not as clear cut as political rhetoric might suggest. A more open and honest debate is needed about the rationale for these policies, and whether the evidence supports these positions.

Published in collaboration with The Conversation

Author: Mike Brewer is Professor of Economics at the University of Essex and joint Director of the ESRC Research Centre on Micro-social Change. He is also a research fellow at the Institute for Fiscal Studies.

Image: Children work together in the background whilst colouring pencils