There are very few woman in todays society who reduce their working hours to look after their own children. Most families would just experience a generally lower quality of life by going on less trips, wearing out clothes, eating lower quality food.
The effect of subsidizing day care is going to have a very marginal effect, on economic output. If anything, all those woman who take extra shifts and second part time jobs in order to pay for day care might work less if their out of pocket costs for daycare go down.
The bigger issue is that when you make day care cheaper, there may be an increased demand for daycare because at least a few families will decide to go daycare rather than family care, and that means increased competition for the same number of spots. Basic economics tells us that when demand goes up, either price goes up, or, supply must increase.
If price goes up, then we are no further ahead as a society, as the taxpayers have to pick up the increased cost one way or another, normally through taxes, but more likely through inflation. Inflation will compound the previously discussed price increase. And this of course doesn't address the added friction by having to employ unskilled government drones to administer a transfer of funds from tax payers to federal government to provincial government to day care provider.
For supply to increase, this would mean that we would need to attract a lot of new day care providers to the market. Typically people with zero experience who wouldn't have considered a career in child care. What you are going to get is a lot of unemployed single parents who are already on EI taking care of their own children that will start home daycares. These are precisely the home day cares that cause most of the problems with poor outcomes.
Invariably, when there is an increase in supply in a constrained market, quality of the overall product goes down. We saw this exact thing happen in Ontario about 4 years when the Wynne Liberals started screwing around with day care regulations and capacity limits. They reduced home day care capacities by 20% and brought in extra rules, in order to make day cares 'better', and what happened was 20% of day care spots evaporated over night. All of a sudden prices per child went up by about 20%, and the market was flooded with a bunch of first time providers who were interested in providing substandard care at inflated prices. Immediately afterwards people started crying for day care subsidies. More government solutions required to solve government caused problems.
But yes, every government program involves a displacement of funds. And most of the time it relieves people at the bottom of society of their money while transferring it to the wealthy (ie the government drones getting paid to administer useless programs). And the losers, as always, are the children, who will be the ones who end up paying for their own day care when the government is forced to eventually raises taxes.
