The affordability of regular child care services is key to the educational and social experiences that preschool children receive and the employment choices that parents make. Affordability of child care is therefore central to outcomes that are of considerable interest to policy-makers. It is surprising that there is no accepted way of measuring the affordability of early childhood education and care (ECEC) services, despite widespread concern with "affordability" as a policy goal.

This paper discusses, proposes and tests a measure of affordability of child care services using data from Canada.  This measure is able to rank-order families according to an index composed of both the anticipated price of such services in their locality for the ages and number of preschool children in the family and the expected after-tax after-benefit incomes of the relevant family members (either the lowest earner or all earners). This index gives us a complex policy-relevant distribution of child care affordability that varies by region, urban size, family size, age of parents and children, marital status of parents and other variables of interest.  We test the ability of this index to explain the child care and employment choices made by parents, and suggest different ways of determining the borderline between affordability and unaffordability.

We use several different data sets - the National Longitudinal Study of Children and Youth, the Survey of Young Canadians, the Labour Force Survey and the Survey of Household Spending (each data set has advantages and disadvantages) - along with the Canadian Tax and Credit Simulator to calculate market and subsidized child care prices and predict potential incomes for each family. We examine the strengths of each data set in constructing alternative ways of measuring affordability, and suggest the appropriate types of data necessary to calculate this affordability index in other jurisdictions.