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Comment by nickff | Hacker News Reader

How is universal childcare less market distorting? It seems to me that the larger the subsidy (or tariff for that matter), the more the distortion.

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Universal childcare seems to me significantly less distorting than universal childcare for childcare workers. It’s larger subsidy yes but it corrects for an existing distortion (parents pay full price for childcare to raise children who then end up paying taxes to the state), and it does so in a way that it doesn’t break one specific labor market.

We do not do parents who aren’t already childcare workers a favor by skewing the market for their labor. For some parents, working in childcare is the right choice, but for many it won’t be, and when you artificially inflate short term wages only if they go into childcare, everyone loses.

But the entire childcare market is run on such tight margins that they all require a model of having a waiting list for children, meaning the market is massively underserved by design.

It would seem to me that this is only likely to result in more childcare workers, making it more accessible to all, no?

After how much time would the nonlinear effects of the subsidy be expected to be apparent?

What hypothetical effect would discontinuation of the subsidy have: while it's initially resulting in labor shortage reduction and then after time t?

Are counterfactuals helpful for this problem?

Not an economist, but I imagine that the job market for child care workers would be less distorted, even if the general service market for child care is more distorted.

Distortion is the desired effect, no?

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