Public Investments in Children's Human Capital. Evidence from the Literature on Non-parental Child Care

This paper analyzes the most recent empirical research on social investments in children's human capital, focusing on policies providing non-parental child care. The empirical findings are conceptualized in a theoretical framework showing how policy interventions can shape parents' non-parental child care choices; this framework is also used to discuss the econometric issues arising for the identification of the child care effects. The results from both European and American contributions are presented, taking into account the institutional context where the policy has been implemented and the timing of the intervention. The majority of large-scale policies providing non-parental child care have positive effects on children's cognitive outcomes, both in the short and in the medium run, and on adult outcomes. Results also show that, in countries with scarce availability of public child care services, whether or not child care has an impact on children's development depends on the population at which the service is targeted.