Formal Childcare Provision and Birth Trends: Evidence from Italy

Abstract Using a counterfactual framework based on municipal data, we examine the effect of variations in the provision of Early Childhood Education and Care (ECEC) services for children below three years of age on births in Italy. We find that an increase in the availability of ECEC services has a positive and statistically significant effect on the number of births at the municipal level. However, these significant effects on births require two conditions. First, the increase in the coverage rate must be sufficiently large, rather than the result of very gradual incremental growth. Second, minimum initial levels of ECEC coverage (of at least 10%) must already be present. At the same time, we find no “saturation effect” when coverage increases starting from an already relatively high level of ECEC coverage. Findings are consistent with the idea that the insufficient availability of formal childcare represents one of the barriers to the realization of couples’ reproductive plans. At the same time, the present study provides a cautionary tale on what can be expected in terms of fertility outcomes thanks to investments in ECEC provision in countries with very low fertility rates: mainly due to the “fertility trap”, policy interventions through an expansion of ECEC slow the decline in births, but do not manage to fully offset it.