August 2007

IZA DP No. 3009: Public versus Private Provision of Daycare: An Experimental Evaluation

published as 'Child care voucher and labour market behaviour: experimental evidence from Finland' in: Applied Economics, 2011, 43 (23), 3203 - 3212

This paper provides experimental estimates of the impact of a voucher for private care within the Nordic system of universal provision of public care. The private daycare voucher acted as a significant boost for new daycare entrepreneurs to enter the market thus increasing the overall daycare provision in the municipalities participating in the experiment. In a market that was providing high-quality, low-cost public daycare, a voucher is nevertheless found to have a significant, positive effect for the use of private daycare with zero to negligible effects on the use of public care and labor force participation.