Research summary - The business dynamics of self-employed child care service providers

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Why this study

This study examined the characteristics of self-employed child care service providers (SECCSPs) in Canada. The aim is to better understand the supply of child care in Canada. For these businesses, the following elements are examined:

• characteristics of the owners
• their families, and
• the changes in their total family income surrounding the opening and closing of the child care business

Around 100,000 of these small businesses are reported each year. Most SECCSPs are run by unlicensed providers. They offer fewer spaces than larger licensed centres. SECCSPs represent an average of 32.1% of all child care revenue.

What we did

To create the dataset of SECCSPs, this study used information from:

• the Canadian Employer‒Employee Dynamics Database by the Analytical Studies and Modelling Branch
• Business Register at Statistics Canada, and
• the Integrated Permanent and Non-permanent Resident File of the Longitudinal Immigration Database

Together, these data sources make it possible to identify:

• small child care businesses
• characteristics of the business, owners, and their families, and
• immigrant status

What we found

In Canada, 267,903 self-employed child care service providers were active between 2008 and 2016.

Most SECCSPs are small businesses. Typically, the only person working at the business is the owner or entrepreneur, and the main capital is space within a private residence. For the SECCSPs examined here, 98.3% have no employees. Of the remaining 1.7% of SECCSPs, 0.9% have one employee and less than 0.5% have two employees or more.

The results show that immigrants constitute an important part of the operators of small home-based child care businesses (39.7%). Immigrant owners have different characteristics compared with non-immigrant owners. They tend to be:

• older, and
• more likely to operate a child care in a low-income household

Most immigrant owned SECCSPs were concentrated in:

• Ontario
• Quebec, and
• British Columbia

The results also show that households without children under the age of 13 years make up half of all SECCSPs. This stands in contrast to the idea that home child care businesses are largely associated with families with children. Moreover, the proportion of SECCSPs in households with infants or very young children is quite low. This suggests that business models where a parent (almost always a mother) opens a SECCSP while also caring for their own child would represent less than half of SECCSPs. In fact, almost 3/4 of SECCSPs are in households without children younger than 4 years.

Between 2008 and 2016, low-income families owned 30.4% of SECCSPs. More than half of immigrant-owned SECCSPs (53.5%) are in low-income households. Meanwhile, 15.3% of SECCSPs owned by non-immigrants are in low-income households.

Trends over time in self-employed child care providers

• the number of SECCSPs in Canada rises from 2008 to 2013 and declines until 2016. This occurs because the number of entrants into the child care market is declining. At the same time, the number of exits is rising
• the majority of SECCSPs are micro-businesses that do not grow in size over time
• they tend to be short-lived
• family characteristics and immigrant status affect metrics
• they appear to affect incomes of many households as a transitionary measure or as a source of replacement income
• compared to Ontario, SECCSPs are less likely to remain active for an additional year in the following jurisdictions:
  • Alberta
  • British Columbia
  • Yukon
  • Northwest Territories, and
  • Nunavut
• the introduction of full-day junior kindergarten or kindergarten is associated with a lower likelihood of a SECCSP remaining active

What it means

This study presents a first set of results for understanding the characteristics and the evolution of the population of small SECCSPs between 2008 and 2016.

The results show that immigrants run an important share of home childcare businesses. In particular, women in low-income families.

The results suggest that the presence of children in a household is not the main reason for operating home child cares. On the contrary, SECCSPs function as a short-term way to supplement family incomes. Immigrant and low-income households may use SECCPS to raise family incomes during transitions.

Contact us

Income Security and Social Development Branch, Early Learning and Child Care, Data and Research Unit

Email: esdc.nc.sspb.research-recherche.dgpss.cn.edsc@hrsdc-rhdcc.gc.ca