Access to high-quality childcare is central to advancing women’s economic and social agency while promoting children’s development. However, in many LMICs, childcare markets are largely informal, with care often provided in unregulated home-based settings. As a result, childcare is often of poor quality, while also being unprofitable and unaffordable. Mothers typically bear the burden of this market failure, forgoing income-earning opportunities and (in the aggregate) affecting gender earnings gaps.
We test whether improving the quality of childcare affects the profitability, price, and availability of childcare and the subsequent labour market effects on mothers. Specifically, we partner with Kidogo, a Kenya-based social enterprise that provides training and support to child-care providers, or “mamapreneurs,” working in informal settlements in large cities in Kenya. Interested providers join a three-month training and mentoring programme aimed at improving childcare centre quality. They also receive a one-time capital improvement grant of approximately $200. In turn, providers who complete the training and meet Kidogo standards can pay a fee and use the Kidogo logo to signal centre quality to the market.
We evaluate the effects of Kidogo through a clustered randomised controlled trial in 60 informal settlements containing roughly 1680 providers. After conducting a census and baseline, we will randomise communities into two equal groups: treatment, where Kidogo enters, and control, where Kidogo does not enter. We will measure the short-run and long-term effects via in-person and phone surveys, re-mapping communities each round to determine firm entry and exit. To measure spillover impacts onto non-Kidogo competitors, we will use machine learning to predict those most likely and least likely to join the programme.
We will examine impacts on key firm-level outcomes: (1) childcare facility quality; (2) childcare operations, including prices, number of children, and profitability; (3) childcare provider well-being, empowerment, and intra-household bargaining power; and (4) firm entry and exit. We augment this firm data with a representative survey of households with children under 6 in these areas to determine the impacts of Kidogo’s entry on childcare demands and use, labour force participation, and child anthropometrics.
This project makes important contributions to both the academic literature and policy. While economists typically assume quality and price are positively correlated, the impact of introducing high-quality competition is ambiguous (Gaynor 2011). In particular, new firms may also lower quality as they lower prices in a “race to the bottom”. Alternatively, lower-quality firms may decide to exit, reducing overall market availability. Our study provides novel and rare empirical evidence on how firms adjust operations to quality improvements and how their competitors respond.
Second, this study causally identifies the role of childcare quality on the demand for childcare and its subsequent impacts on female workers and gender equality. Affordable, high-quality childcare is out of reach for many parents (Neuman and Powers, 2021). While providing childcare improves maternal earnings (Bjorvatn et al., 2022; Ranganathan and Pedulla 2018; Cascio 2006), less is known about quality improvements. Such impacts may be substantial, as mothers in focus groups consistently report that the quality, not only the price, is a barrier to enrolment. For example, in Kenya, children-to-staff ratios in preschools are frequently over 30:1 (Devercelli et al., 2016).
Third, our study identifies the impact of childcare on children in a vulnerable population. Investments in early childhood education increase longer-term outcomes ranging from the likelihood of having a bank account to voting to completing high school (Heckman and Karapakula., 2019; Cohodes et al., 2021; Gray-Lobe et al., 2021; Bartik et al., 2022). Yet, some studies find that participation in childcare harms children (Baker et al., 2008), suggesting that the quality of care received is crucial for children to receive the benefits.
Fourth, this study contributes new information to the literature on the impact of business training for a sector that is nearly entirely female-dominated. The capital grant and intensive training help home-based child-care providers, who themselves often remain in poverty (Howard et al. 2020). Home-based childcare is also often devalued, and the professionalisation this model brings builds confidence among providers and pride in their businesses. This study thus contributes to a new understanding of how vulnerable women’s self-esteem change as their profits increase (Hussam et al., 2022).
Finally, this study will generate meaningful lessons for policymakers in LMICs. It will first present descriptive statistics on childcare, firm operations, and gender in informal settlements, providing an intersectional view of an important economic sector among a vulnerable, disadvantaged population. It will generate novel findings on whether social franchising works at improving quality and measure its cost-effectiveness. These findings are particularly important in settings where governments have limited capacity to provide childcare directly or to regulate the sector. Our study thus provides lessons on how the childcare market operates, a key factor affecting gender equality worldwide.