For future economic growth, invest in care

The Nobel Committee has weighed in: childcare is not just a family issue, it’s an economic one. We’ve all needed or provided care at some point in our lives — for ourselves, our children, or elderly or sick family members or friends — but the labor involved in providing that care has been systematically undervalued. Historically, it’s been unpaid mothers and daughters or underpaid domestic workers serving as caretakers — roles that have undermined girls’ education and women’s economic security. It’s a long-standing pattern documented by this year’s Nobel Prize in Economics winner Dr. Claudia Goldin, who demonstrated the labor market effects of the “motherhood penalty,” or how gender wage gaps actually get worse for women when they become mothers. The implications are clear — to advance gender equality and promote economic growth, we must invest in care solutions. 

The international development community is doing just that, and it’s paying dividends. 

Investing in care infrastructure boosts economies in three important ways. First, it creates jobs for care workers, increasing the economic well-being of the entire community. The World Bank estimates that addressing the childcare gap for the 72 percent of preschool-age children — and their families — worldwide who lack sufficient care services would create up to 43 million jobs.

Second, it frees up parents, and particularly women, to enter paid employment or other economic activity, contributing to their household’s economic security. Research in Brazil, Kenya, Mexico, Vietnam, Indonesia, and elsewhere has found that access to affordable, quality childcare can raise women’s labor force participation by over 40 percent, and leads to higher incomes for women and improved business productivity. This in turn benefits economies; one recent study found that closing the labor market gender gap worldwide would lead to a rise in economic activity of approximately $7 trillion.

Third, investing in care leads to stronger early childhood development outcomes and more productive lives for persons with disabilities and all those requiring care. Early childhood interventions, including quality childcare, improves school readiness, making it more likely that children remain and succeed in school.  

The U.S. Agency for International Development (USAID) and other development actors are putting this evidence into practice. While we’ve long invested in women’s economic empowerment by building women’s skills and access to finance, we are now also focused on expanding their access to care services. This is part of a broader global commitment to close the infrastructure gap in developing countries, recognizing care as a critical infrastructure gap alongside energy, supply chains, and other priorities.

To mobilize public investments, last year, the United States joined Australia, Canada, Germany, and private foundations in supporting the World Bank’s launch of the Invest in Childcare Initiative, with at least $180 million over five years to expand childcare in low-and middle-income countries. The initiative is matching government investment in target countries to, for example, increase parents’ employability in Moldova for both vulnerable Moldovan families and refugee Ukrainian families by expanding their access to quality childcare, and in Senegal, create a stronger care workforce by including childcare as a training track in the country’s technical and vocational schools.

To scale private sector and civil society solutions, in Colombia, USAID is supporting efforts in cities across the country to develop local community caregiving solutions, inspired by the successful Bogota “care block” model. In India, the Self-Employed Women’s Association is testing similar approaches by linking community, government, and private sector support to integrate quality childcare with health, nutrition, and education services. In the Kyrgyz Republic, a new program supports women entrepreneurs running private care centers that in turn enable more women to pursue paid work — a double win for women’s empowerment.

Reaching national-level care coverage will require innovations in public-private financing. During the COVID-19 pandemic, Canada announced a national child care initiative to subsidize childcare costs in public and private institutions and to cap individual families’ expenses, making care more affordable and accessible for all. In Malaysia, the government underwrites childcare costs for both families and daycare centers, providing a public subsidy for private sector day care workers’ wages, while also permitting families to take an annual personal tax deduction for fees to childcare centers. Governments around the world can learn from these models.

For the first time ever, the world recognized International Day of Care and Support last month. The right investments in care infrastructure worldwide have nothing but upside: they are job-creating, enable women’s economic participation, and create strong foundations for our children. This year’s Nobel Award in Economics makes clear: investing in care today is an investment in our future.

Bama Athreya serves as USAID Deputy Assistant Administrator for the Gender Equality and Women’s Empowerment Hub and the Inclusive Development Hub. Prior to this position she researched the intersections of technology, labor and care as an Economic Inequality Fellow at Open Society Foundations. Jamille Bigio serves as the USAID Senior Coordinator for Gender Equality and Women’s Empowerment in the Office of the Administrator. She previously researched gender equality at the Council on Foreign Relations and served on the White House National Security Council staff during the Obama administration.