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In this project we investigate the impact of subsidized childcare on children’s mental health and cognitive development in the Netherlands. Utilizing different administrative data sources, we combine a reduced form approach and a structural dynamic model of child development to improve our understanding of how mental health and cognitive development interact throughout childhood and at which ages in childhood daycare utilization is most beneficial for children with different socioeconomic backgrounds. We then use our structural parameter estimates to simulate the consequences for inequality in children’s development of a free-of-charge childcare policy. The results of our study will directly inform the recent discussion in the Netherlands about abolishing the current subsidized childcare scheme in favor of making childcare free-of-charge.
