Access to government childcare subsidies increases women’s career mobility and enables them to change firms and seek more ambitious jobs — while also benefiting the firms they join, new research shows.

“Childcare access, particularly government subsidies, affects women’s career choices in terms of career progression and what type of firms they choose to work with,” says Ting Xu, an assistant professor of finance at the Rotman School of Management. “Many women wanted to pursue a more ambitious job but couldn’t, because they had to choose a job with flexible hours that was compatible with their childcare responsibilities. Once this constraint is removed, we see women upgrading their careers, and we see increased earnings and productivity.”

Co-authored with University of North Carolina’s Elena Simintzi and University of Alberta’s Sheng-Jun Xu, this study comes two years after Canada’s federal government introduced $10-a-day universal daycare. To measure the efficacy and impact of such a program, the researchers keyed in on Quebec’s similarly run program, which originally launched in 1997.

The study focused on mothers who gave birth between 1993 and 1999 by analyzing tax filing information between 1989 and 2004.

The researchers compared cohorts of Quebec mothers according to how long their child benefitted from the program and looked at the impact of “better or longer access” to universal childcare. They also traced each mother over time and compared her career outcomes before and after childbirth. ”It’s really about how much you’re earning today after childbirth relative to pre-birth.”

Their findings confirmed that childcare subsidies led to greater employment among new mothers – especially those who were unemployed before giving birth. Xu and his colleagues also discovered that moms who had early access to universal childcare tended to earn more after childbirth, enjoy more promotions (and fewer demotions), and were more likely to opt to voluntarily change jobs. This included taking roles at firms that the researchers refer to as “mom-unfriendly” — such as male-dominated firms or those offering less flexibility.

The researchers also examined impacts on the firms, seeing such benefits as better profitability, growth and productivity for firms that were traditionally unattractive to new mothers. They found that, thanks to the universal childcare program, Quebec’s “mom-unfriendly” firms were more likely to see “an influx of young and productive female employees,” Xu says. “From a social perspective, this signifies better matching. These are productive women and they should match with a productive firm and realize their potential.”

While parental leave is attached to specific employers, universal childcare is employer agnostic, says Xu, adding that other studies have demonstrated parental leave actually reduces job mobility.

This might be problematic, as job mobility by women can improve gender diversity in the workplace, Xu adds. “Those [firms] that used to have less women now have more. The firms they left already had a lot of women. So essentially, there’s more balancing of gender across firms and sectors and less gender segmentation.” Having more women in a workplace also benefits male colleagues, he says, referring to other research that demonstrates the positive impact of diversity. “It increases productivity, renews perspective and makes people more creative.”

Xu has always been interested in research that could be useful to policy makers. “[Canada] just passed the federal childcare program two years ago, which was many years in the making,” he says. “Quebec was definitely the leader; other provinces followed suit. This provincial evidence helps inform what we can expect from the federal program. It also provides quantitative input to policy makers who want to do some cost-benefit analysis. They can take parameters estimated from our paper.”

Ultimately, it’s clear that once the constraints of childcare concerns are removed, mothers are free to explore their ambitions and pursue more intense careers, Xu says.

“We’re showing that it’s not that new mothers don’t want to upgrade their career or pursue an ambitious job, it’s just that their hands were tied with lack of childcare support,” he says. “Now given these subsidies, they are able to do that despite having a young child.”