The Impact of Non-Parental Child Care on Child Development: Evidence from the Summer Participation Dip

Chris Herbst, Arizona State University

Few studies in the child care-child development literature deal convincingly with the endogeneity of child care choices. Using a panel of children from the ECLS-B, this paper provides causal estimates by leveraging heretofore unrecognized seasonal variation in child care participation. Child assessments in the ECLS-B were conducted on a rolling basis throughout the year, and I use the participation “dip” among those assessed during the summer as the basis for an instrumental variable. The summer participation “dip” is likely to be exogenous because ECLS-B administrators strictly controlled the mechanism by which children were assigned to assessment dates. Results from OLS and child fixed effects regressions show that children utilizing non-parental arrangements score higher on tests of mental ability. However, the instrumental variables estimates point to sizeable negative effects of non-parental care. These effects are driven by participation in formal arrangements. Furthermore, disadvantaged children do not benefit from non-parental settings.