When I drop my kids off at daycare, it does occasionally occur to me: what am I doing to them? (This thought is particularly acute when they wrap themselves around my legs). Last year, 3ie put out a systematic review on the impact of daycare  programs. The conclusions are instructive:
"Only 6 studies (all conducted in Latin America) met our inclusion criteria. In general, large positive effects on measures of short and longer term child development were found. Due to inconsistent results, no conclusions can be drawn with respect to the impact on child health and nutrition. More rigorously conducted studies on the impact of daycare programs in low and middle income countries are needed. "
A recent paper  by Sebastian Martinez, Sophie Naudeau and Vitor Periera helps to fill this gap. Working in the context of Mozambique, Martinez and co. look at a Save the Children daycare program. This is a fairly low cost program, clocking in at around $2.47 per student, per month. It's community based, with communities putting up the space, some of the materials, and labor for the classroom construction. Save the Children helps the communities out with training, technical assistance, and additional materials (among other things). Teachers are volunteers who seem to get a modest stipend. Kids go to daycare for about 3 hours and 15 minutes a day.
To set up the evaluation, Martinez and co. put communities into blocks and then randomly assign one community to treatment within each block. They survey 2000 households in 2008 and then catch about 95 percent of them two years later. The data collection includes a bunch of household variables (including outcomes on older siblings and caregivers) but also a battery of measures of child development (see the paper for an interesting discussion of the range of these measures and what they are designed to capture). They focus these child development indicators on the kid in the household most likely to go to daycare.
Not surprisingly, the program results in a rather significant increase in enrollment in daycare -- enrollment among the relevant age group was 55.6% in treatment controls and 11.7% in control. In terms of program impacts, Martinez and co. focus on treatment on the treated estimates (using treatment assignment as the instrument) - so keep this in mind when looking at the effect sizes.
First of all, kids who go to daycare are significantly more likely (15. 4 percentage points) to enroll in primary school, and they are more likely to enroll at the appropriate age. And these kids spend more time -- 46% over the controls -- on schooling and homework. Turning to measures of child development, the children who participate in preschool show large increases in cognitive development relative to the controls, and more development in precise motor skills and emotional development. Results on language and communication are more mixed.
When Martinez and co. turn to child growth and health, they find no significant impact of the program on stunting or wasting. Two things might explain this despite the fairly high baseline indicators of malnutrition: first, these kids may be out of the range of easily malleable nutrition indicators, and second, this program doesn't include any direct nutrition intervention (e.g. feeding the kids when they come to class). In terms of illness, they find a significant reduction in skin problems (there is a program emphasis on hand washing), but a 10 percentage point increase in the probability of the child being sick in the past four weeks -- primarily with a cough. For any parent who has had a kid in daycare, this latter result resonates.
So what happens to other kids in the household? Looking at 10-15 year olds (who won't be directly affected by daycare), Martinez and co. find that they are more likely to go school (current enrollment goes up by 4.3 percentage points (significant at 10 percent) and likelihood of ever being enrolled goes up by 4.8 percentage points).
From a gender point of view, one of the more interesting results they find is the impact on adult caregivers. Here they find that caregivers are 6.2 percentage points (or 26% more than the controls) likely to have worked in the past 30 days -- and they don't find a significant difference between mothers and fathers. So this relatively small amount of time per day seems to significantly free up the parents to work – both of them.
Finally, Martinez and co. get kudos for emphasizing external validity (more than once): "Finally, it is important to emphasize upfront that this report presents the results of a small and well managed program implemented in three Mozambican districts and the analysis is focused on results achieved by the approximately 55% of children who actually enrolled in preschool. Whether or not similar results can be replicated in other parts of Africa with large scale programs or with close to universal enrollment remains an empirical question and should be tested in future research." Yes indeed, and let's see some more of those impacts on adult labor supply.