Earlier research suggests that children's development is shaped in their early years of life. This paper examines whether differences in day-care experiences during pre-school age are important for children's cognitive and language development at the age of 15. The analysis is based on class performance at the end of elementary schooling. We assess the effects of attended types and qualities of day-care institutions on various child outcomes as measured by school grades in mathematics, science, English and Danish for the whole Danish population as well as outcomes from the 2006 PISA Denmark survey and a 2007 PISA Copenhagen survey. We use administrative registries to generate indicators such as child-staff ratios, child-pedagogues ratios, and the share of male staff and of staff with non-Danish origins. Furthermore, we use information on the average levels of educational attainments, of total work experiences, ages and hourly wages of staff members. Those indicators show the expected correlations with children's development outcomes, better day-care quality being linked to better child outcomes ten years later. We use rich administrative information about the children's background as well as an instrumental variable approach based on wider geographic area aggregates to test whether those correlations reveal unbiased causal effects. The identification of truly effective quality characteristics of day-care centres enhances policymakers' resource allocation to make all children getting ready for school.
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European Society for Population Economics (ESPE), 2010