"This study examines the child care “expenditure share,” defined as child care expenses divided by after-tax income. We estimate that the average child under six years of age lives in a family that spends 4.9 percent of after-tax income on child care. However, this conceals wide variation: 63 percent of such children reside in families with no child care expenses and 10 percent are in families where the expenditure share exceeds 16 percent. The proportion of income devoted to child care is typically greater in single-parent than married-couple families but is not systematically related, to a constructed measure of socioeconomic status. One reason for this is that disadvantaged families use lower cost modes and pay less per hour for given types of care. The expenditure share would be much less equal without low cost (presumably subsidized) formal care focused on needy families, as well as government tax and transfer policies that redistribute income towards them."

Dan T. Rosenbaum and Christopher J. Ruhm (2007) “Family Expenditures on Child Care,” The B.E. Journal of Economic Analysis & Policy, 7(1)

They should've mentioned, but of course they didn't bother, that their study refers only to the US. I wonder if the data even exist in this country.

Other interesting points from this article. 60% of children under 6 live in families using child care (outside of the immediate family). 40% of the care is provided by grandparents or other relatives (three quarters of it free). A third is provided by day care centres and pre-schools and the rest by an assortment of providers, presumably untrained, at low cost.

23 percent of children are in families who utilize only free sources of care (i.e. 38% of the children whose families use any non-immediate family childcare). 37% of children live in families that use paid childcare for at least part of the time.

They sorted payers and non-payers into 4 groups. People who don't use childcare or only free childcare have an average monthly income of about $2700. People who use the most paid care, spend 29.7% of their disposable income and have an average monthly income of $2200 - 40% of this group are working single parents. It has an average of 65 hours a week of childcare! The group that uses the least paid childcare has the highest income ($4700 a month) and spends only 3.1% of disposable income.

Another interesting little snippet is from a 1991 study: "expenses, for families with children under five and who pay for child care, are 10 percent when the mother is employed and 6 percent when she is not." i.e., stay-at-home mums use paid childcare too! (or maybe there's something wrong with the definition of 'employment').

Anne Summers blogged the other day about her article in the Sydney Morning Herald, 12 April, "about the proposal by the Victorian government that the federal government adopt a plan that would address child care supply and costs, and would also inject an early education element into care."

I was intrigued by the opening sentence referring to a 'peace dividend'. Still don't know what that means. Anyway, I looked up the budget papers and found that spending on defence as well as 'public order and safety' increased by 33% during 2001-02 to 2005-06, compared with 24% for social security. Spending on child care comes under the social security "sub-function" of "assistance to families with children" which, according to the only figures I could find, grows even more slowly than the wider social security budget. Actually, I seem to remember the Treasurer trumpeting that child care expenditure had increased by 26%. Well, hoorah!

I also looked at the education budget - which includes spending on pre-schools. Here I found that half of the total expenditure goes on schools and about a third on universities. (Mostly schools are funded by the states, while the feds fund the universities). Of interest, however, was the comment that most of the growth in school funding was for private schools in disadvantaged areas and that the private sector actually only funds 43% of private school budgets. Public schools get funding indexed to inflation - so that's what happens to public schools in disadvantaged areas?

At my public sector university, the private sector funds about 75% of the budget, mainly through fees paid by students and I guess the situation is similar for most public universities (though some of the older ones have property that also provides income). So what the government is doing right across the education sector, from early childhood to university, is spending much more money per student on the private sector than it does on the public sector. That makes sense doesn't it?

Meanwhile, we have such a shortage of skilled labour that we have to import it. Skilled migrants have lower unemployment rates than the domestic population (though unemployment of unskilled migrants is higher). Other countries pay the cost of educating skilled people and then suffer the brain drain (especially countries like China and India, from which increasing numbers are coming). This enables us to reduce the proportion of the budget that we spend on education and increase the proportion we spend on the GWOT (which we are losing, so we'll have to spend and surge even more, etc).

While we're on the subject of child care, we have all these women, many of them with skills that we need, except that they can't afford to work full time because there isn't enough child care or (more likely) the quality of the child care is too poor so they refuse to use it. The ingrates just don't appreciate their luck in being offered more child care places with untrained and pitifully paid workers. I mean, what if women actually want their kids to get off to a good start in life?

I'm seriously going to see if I can get some students to work on the economics of this problem.