Does Early Child Care Help or Hinder Child Development?

(2018), Journal of Public Economics 159: 33-53 (with R. Lalive)

We study how early child care (ECC) affects children's development in a marginal treatment effect framework
that allows for rich forms of observed and unobserved effect heterogeneity. Exploiting a reform in Germany that
induced school districts to expand ECC at different points in time, we find strong but diverging effects on
children's motor and socio-emotional skills. Children who were most likely to attend ECC benefit in terms of their
motor skill development. Children who were least likely to attend ECC gain in terms of their socio-emotional skill
development, especially boys and children from disadvantaged families, such as those with low education or
migration backgrounds. Simulating expansions of ECC, we find that a moderate expansion fosters motor skills for
all children and language skills for boys and immigrant children. A progressive expansion of ECC improves all
children's socio-emotional development but neither their motor skills nor their language skills.