The Economics of Daycare and Douglas North

Below that’s a picture of my daughter Sylvia and me reading a book about farming. Taking care of Sylvia has taken precedence over taking care of the blog for the last six months. Today, however is Sylvia’s first day at daycare. So in her honor here is a post on the economics of daycare.




One thing I have been thinking about lately is how pre-school and daycare might be part of a national development strategy. I’ve been participating in a couple of seminars at the InterAmerican Development Bank on early childhood development. In the US there has been a growing body of evidence that early interventions before kindergarten have a huge payoff for the individual child (a previous post). At the seminar one participant mentioned that the payoff to daycare often isn’t in terms of test scores in math or reading, but that it increases children’s ability to socialize when they get older.

Douglas North, a Nobel Prize winning economist, theorized that much of economic development is based on the institutions and social norms that a society forms. These social norms will certainly play a role in what is taught in daycare. I wonder if it might work the other way around, if daycare increases in a country could it improve how people get along and trust each other thirty years later. It’s a hard empirical question to answer, but if as North points out trust is central to economic development and early childhood development formed in daycares shapes the ability to trust then it might follow that daycares are a driving force of a country's economic development.