4. Quantifying Economic Significance

4.1 What does Nordic research reveal about the causal impacts of early-life policies in shaping long-term outcomes?

The working group hosted a Nordic expert seminar on the economic impact of qualitative ECEC in Reykjavik on 3 October 2023. Professor Miriam Wüst from the University of Copenhagen provided an overview of current economic research from the Nordic countries on the causal effects of early childhood education, including the importance of early life circumstances, investment and the impact of design features on child outcomes. The presentation highlighted several examples that stressed the significance of the age of the child at ECEC enrolment, the importance of quality assurance, professionally trained staff, and measures to improve the intake of children from immigrant backgrounds.

A large body of economic research into early investment policies has focused on higher income for families (tax credits), paid-leave policies, direct financial aid programmes (such as school meals and food stamps), early-life health policies (preventive care during birth and infancy and vaccination programmes) and childcare programmes (ECEC).

Looking specifically at ECEC investments, research has looked at the type of ECEC services that could be provided, the impact of their design, various quality aspects, the question of timing (when a child should start in ECEC) and which children the services should target (early intervention agenda).

However, demonstrating direct causality is inherently difficult due to challenges arising from aspects such as the selection of elements, the variability of content, and a lack of data or data suggesting multiple dimensions.

Nonetheless, it is possible to note some causal effects of ECEC from first- and second-generation Nordic studies: Studies examining the roll-out of universal programmes in the 1970s provide solid evidence of positive causal (long-term) impacts of ECEC on individuals’ educational and labour market outcomes.

Dietrichson, Kristiansen, and Viinholt (2020): Universal preschool programs and long-term child outcomes: A systematic review. Journal of Economic Surveys. https://doi-org.ep.fjernadgang.kb.dk/10.1111/joes.12382

These tend to be greater for disadvantaged individuals

Havnes and Mogstad, 2011 and Havnes and Mogstad, 2015: Roll-out of access to public childcare in the 1970s https://soeg.kb.dk/permalink/45KBDK_KGL/1f0go08/cdi_elsevier_sciencedirect_doi_10_1016_j_jpubeco_2014_04_007

Given the current universal coverage of ECEC in the Nordic Region and increased research focus on the intensive margin (types and quality of ECEC, age of entering and the weekly/daily time spent there) rather than the extensive margin (whether or not children have access to ECEC), second-generation studies have focused on other aspects such as ECEC staff composition or child-teacher/child-staff-ratios. Evidence of the effects of Nordic ECEC design focuses mainly on shorter-term impacts, with many studies examining a diversity of settings and methods, thus potentially affecting the more general applicability of the results.

However, they do point to the important impact of both ECEC timing and design on children's outcomes. These studies are, for the most part, challenged by the limits of available data – see our recommendations above. High-quality national data on, for example, childcare inputs and child development at younger ages is sparse or non-existent.

Some examples of research from the Nordic Region:

Timing of ECEC

Comparing outcomes for children in different types of care (centre vs family-based): Centre-based care appears to outperform family-based daycare with reference to children’s 9th grade GPA (grade point average) in Danish.
https://ideas.repec.org/a/eee/ecoedu/v53y2016icp217-229.html https://www.sciencedirect.com/science/article/abs/pii/S0165176512003527
Early-start and test scores for cognitive development, the effect of enrolment in ECEC at ages one to two: An earlier start improves test scores in cognitive skills and seems to reduce the proportion of critically low scores.
Drange and Havnes, 2019: Early start and test scores https://soeg.kb.dk/permalink/45KBDK_KGL/1f0go08/cdi_uchicagopress_journals_700193
https://www-journals-uchicago-edu.ep.fjernadgang.kb.dk/doi/abs/10.1086/700193
The timing of ECEC start in Denmark seen in relation to increased use of parental leave and children´s socio-emotional development: starting ECEC at age 10.5 months (instead of eight months) improves adolescent wellbeing, conscientiousness and emotional stability and reduces school absenteeism.
Houmark, Jørgensen, Kristensen and Gensowski, 2023: Timing of daycare start and socio-emotional development. https://www.researchgate.net/publication/361955897_Effects_of_Extending_Paid_Parental_Leave_on_Children%27s_Socio-Emotional_Skills_and_Well-Being_in_Adolescence

Quality of ECEC centres

Correlational evidence for positive relationships between ECEC centres´ quality indicators and child outcomes: A research example looking at ECEC participation and the grade point average (GPA) in Danish at 9^th grade. The quality assurance included indicators such as staff-child ratios, proportion of staff with training and proportion of male staff.
Bauchmuller, Gørtz, Rasmussen, 2014: Correlational evidence for Possible relationship of quality indicators with 9th grade GPA in DK https://www.researchgate.net/publication/262975534_Long-run_benefits_from_universal_high-quality_preschooling
Impact of centre characteristics on child outcomes (test scores, language tests): This study examined how the composition of the ECEC centre staff affected child outcomes, particularly test scores and language development. The study found that children who received their first offer of enrolment from a ECEC centre with a higher proportion of male staff performed better on language tests during early school years. Conversely, high sick leave in a ECEC centre was associated with lower test scores in both language and mathematics. Thus, ECEC centre staffing levels and staff composition were found to play an important part in children´s development and educational outcomes.
Drange and Rønning, 2020: Use over-subscription of daycare centres in Oslo to study the impact of centre characteristics on child outcomes (test scores, language tests) https://www.sciencedirect.com/science/article/pii/S0047272720300682?via%3Dihub

Unequal access/peer groups

A pilot project in Norway providing free ECEC for children aged four to five years old resulted in a higher intake of immigrant children: Research indicated a positive impact on national assessment tests in schools at third, fifth and eighth grade but no noticeable effect on marks in tenth grade.
Drange and Telle, 2015: Free childcare for children aged 4–5 in NO https://www.econstor.eu/bitstream/10419/192781/1/dp799.pdf

https://www.udir.no/tall-og-forskning/finn-forskning/rapporter/2023/gratis-kjernetid-i-barnehage-i-oslo-rapport-4/

In future, it would be interesting to conduct more in-depth research into marginalised communities, as there are still some groups with low levels of participation in ECEC despite its universal accessibility in the Nordic Region.

Potential research themes could include

variations in participation levels and the drivers behind differences in enrolment
the interplay of different policies over the course of childhood
how ECEC can shape parental behaviour in terms of labour supply and later educational choices by the children
ECEC and a sense of belonging; the effects of increasing concentrations of migrants in residential areas and neighbourhoods in Nordic cities.