Social Benefits Of Daycare
A recent baby boom, limited availability of daycare, and soaring parental fees have made it difficult for Canadian parents, especially mothers, to find affordable licensed daycares.
Daycares create positive externalities in consumption - incidental benefits that accompany economic activities and affect people for whom the market does not compensate. These benefits, in the long run, include preparing children for school and ultimately for the workforce. Society will prosper from these better educated individuals. The under-provision of daycares by the private market causes market failure – when free markets fail to deliver an optimal allocation of resources (represented by P*× Q* in Figure 1). The marginal social benefit (MSB) exceeds the marginal …show more content…
Fewer mothers are staying home to care for children, instead pursuing careers. High daycare prices and an increase in the participation rate in the labour force will push parents to substitute private daycares with unlicensed daycares. Low-income households and single parents will be more likely to take advantage of unregulated childcare because they have been priced out of the private market. Conversely, there will be less incentive for unlicensed caregivers to undertake the extra fees and time needed to attain a license. With no regulations in place, they may not commit to the well-being of the child; many are unqualified and the ratio of worker to child may be …show more content…
As a result, more parents will be able to compete in the market. This is shown by an increase in the quantity demanded from Q to Q1 due to the price decrease of P to P1, in Figure 2. The new competition for daycares will incentivize owners to further lower prices and improve the quality of the services offered. As a result, children will benefit with better development. With affordable daycare, more women will also be given the opportunity to participate in the labour force. A greater labour input will mean on average, higher incomes for households. In the long run, consumers will increase their expenditure with more spending power, driving economic growth. When subsidies are implemented, the burden on taxpayers increases to offset the cost of the subsidy. More working women will generate more tax revenue for governments, allowing the government to charge significantly less tax to Canadian
Daycares create positive externalities in consumption - incidental benefits that accompany economic activities and affect people for whom the market does not compensate. These benefits, in the long run, include preparing children for school and ultimately for the workforce. Society will prosper from these better educated individuals. The under-provision of daycares by the private market causes market failure – when free markets fail to deliver an optimal allocation of resources (represented by P*× Q* in Figure 1). The marginal social benefit (MSB) exceeds the marginal …show more content…
Fewer mothers are staying home to care for children, instead pursuing careers. High daycare prices and an increase in the participation rate in the labour force will push parents to substitute private daycares with unlicensed daycares. Low-income households and single parents will be more likely to take advantage of unregulated childcare because they have been priced out of the private market. Conversely, there will be less incentive for unlicensed caregivers to undertake the extra fees and time needed to attain a license. With no regulations in place, they may not commit to the well-being of the child; many are unqualified and the ratio of worker to child may be …show more content…
As a result, more parents will be able to compete in the market. This is shown by an increase in the quantity demanded from Q to Q1 due to the price decrease of P to P1, in Figure 2. The new competition for daycares will incentivize owners to further lower prices and improve the quality of the services offered. As a result, children will benefit with better development. With affordable daycare, more women will also be given the opportunity to participate in the labour force. A greater labour input will mean on average, higher incomes for households. In the long run, consumers will increase their expenditure with more spending power, driving economic growth. When subsidies are implemented, the burden on taxpayers increases to offset the cost of the subsidy. More working women will generate more tax revenue for governments, allowing the government to charge significantly less tax to Canadian