The analysis follows the Ministry of Finance’s guidelines. It draws on model-based calculations (LOTTE-Barn and LÆRERMOD), administrative register data, the 2023 Childcare Survey, and previous research on learning outcomes and labor supply. The aim is to provide a solid knowledge base for evaluating a universal free childcare policy.

Parent payments amounted to approximately NOK 7.4 billion gross and NOK 6.1 billion net after tax deductions and childcare allowance in 2023. Eliminating these payments is assumed to require full tax financing. Based on behavioral modelling, free childcare is estimated to increase participation by roughly 3,300 children, with the largest increase among one - and two-year-olds. Parents’ labor supply, also based on the behavioral model, increases by around 2,400 full-time equivalents, primarily due to the removal of income-dependent discount schemes. This corresponds to an increase in labor income of about NOK 1.4 billion including increased tax revenues of around NOK 370 million.

Current non-users of childcare are disproportionately low-income households, single parents, and immigrant families. Free childcare is therefore expected to attract more children from lower socioeconomic backgrounds than those currently enrolled. Increased participation among these groups may promote early equity and help reduce socioeconomic achievement gaps. Based on Norwegian impact studies, the socioeconomic value of learning effects is estimated at NOK 41,000–164,000 per child (present value). Using the medium estimate, the total gain from increased learning amounts to approximately NOK 340 million.

Costs rise because higher enrollment requires more staff. Full coverage would require around 2,200 additional full-time equivalent qualified preschool teachers. Under the main scenario, with 3,300 additional children, demand for preschool teachers increases by an estimated 350 full-time equivalents. Costs per child is substantially higher for younger children as staffing composition strongly influences total costs. Increasing the share of qualified preschool teachers from today’s 41 percent to 60 percent would raise the cost per place by about 3 percent.

Administrative costs associated with the current moderation schemes for low-income families would fall by around NOK 15 million annually under a universal free childcare model.

In the main scenario, the net socioeconomic benefit is estimated at approximately NOK –450 million. This result is sensitive to key assumptions: higher learning effects or stronger labor supply responses would reduce the deficit, whereas a higher increase in participation or a higher share of qualified teachers would increase it. Free childcare becomes economically favorable only if the teacher share falls to around 30 percent—a scenario with uncertain implications for quality, given limited evidence on how staffing composition in childcare centers affects child outcomes.
The report also examines alternatives to universal free childcare, including free childcare for selected age groups, quality improvements through a higher share of qualified teachers, and increased cash transfers. Higher teacher density may be economically beneficial if learning effects rise moderately, but it requires growth in the recruitment of teacher candidates, as there is currently a shortage of childcare teachers. Increased child benefits have important distributional effects, but these learning effects might fade during schooling. Overall, the analysis suggests that while free childcare offers important distributional and learning benefits, it is not economically profitable under current cost and staffing conditions.