Informal daycare may harm kids' cognitive development, study finds

Formal daycare is better for a child's cognitive development than informal care by a grandparent, sibling, or family friend, according to a study of single mothers and their childcare choices published in the July issue of the Journal of Labor Economics.

According to the study, children who go to a formal preschool program or a licensed daycare center have essentially the same standardized test scores as those who stay home with mom. Conversely, each year of informal care reduces a child's test scores by 2.6 percent versus staying with mom.

"Extensive research has shown that a child's early achievement is a strong predictor of outcomes later in life," said Raquel Bernal of the Universidad de los Andes in Columbia, who performed the research with Michael Keane of the University of New South Wales in Sydney, Australia. "This research suggests that separation from the mother has a negative effect on a child's cognitive ability, but this can be offset by the appropriate choice of daycare."

The study took advantage of changes made in the 1990s to U.S. welfare laws that encouraged single mothers to enter the workforce. Before the changes, about 59 percent of single mothers worked outside the home. By 2001, that number increased to 72 percent. The researchers compared test scores for children born shortly before and after the law change to find out if increased employment had an effect on children's test scores, after controlling for outside factors such as socioeconomic status. The scores came from standardized tests the children took between the ages of 3 and 6.

The study found overall that use of childcare reduces a child's test scores significantly. But when the researchers divided the children in the sample into those who received formal and informal care, they found that the reduction in tests scores was driven solely by children in informal care. In other words, formal care was found to have no adverse effect on test scores.

"The policy implication is that it would be desirable to provide financial support that would enable single mothers to spend more time with their children, or support to place children in formal care at early ages," Bernal said.