The Future of Children, Princeton - Brookings: Providing research and analysis to promote effective policies and programs for children.

Governments have typically used two major types of policies to help parents arrange day-to-day care for young children, and a few countries have begun experimenting with a third type. These three policies are parental leave policies, child care policies, and early childhood benefits. Parental leave policies—whether in the form of maternity leave (for mothers), paternity leave (for fathers), or parental leave (for mothers or fathers)—help parents who were employed before the birth to remain at home for a period of time so that they can provide care for the child themselves. Usually, although not always, parental leave policies provide the right not only to a job-protected leave but also to some income replacement during the leave. Child care policies, in contrast, help parents pay for nonparental care for the child by subsidizing the care that parents select, or by providing care directly through public programs. Child care programs serve children of both working and nonworking parents.

The third, newer policy approach to support parents in arranging the day-to-day care of their child is the use of early childhood benefits. These benefits are essentially cash grants that can be used to cover the costs of caring for an infant or toddler, whether those costs involve foregone earnings (because a parent is staying home from work), or child care payments (because the family is purchasing nonparental care for the child), or some combination of the two. Although many countries outside the United States have historically had special maternity grants for women with newborns, early childhood benefits that extend into the first few years of life and that are provided, whether or not the parents are in paid work, are a relatively new phenomenon. Thus, early childhood benefits now constitute a third way that governments are helping parents arrange care for infants and toddlers.

A country's choice of a policy or set of policies can influence the decisions that parents make about care arrangements for their children. If a country offers generous parental leave but little child care, one would expect parents to be more likely to stay at home with their children than to use nonparental child care. Alternatively, if a country offers little parental leave but more generous child care subsidies, parents are likely to return to work earlier and place children in child care. In the absence of strong reasons to believe that government should induce parents toward one form of care arrangement rather than another, it is likely that the best approach is one that gives parents choices. One way to do so is to offer both parental leave and child care subsidies, so that parents can choose the mix of parental and nonparental care that is right for their family. Another way is to offer flexible supports, such as early childhood benefits, that parents can use to subsidize the cost of leave or the cost of child care.