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Positive Externality Of Early Childhood Care

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Early Childhood Care
Positive Externality of Consumption
Early childhood care has been an important issue for New Zealand in recent years, recognised by parents, schools and the Government. Primary teachers have noticed that new students are lacking in general knowledge, awareness, and basic skills such as drawing and attempting to write. For example, just 20% of kids who start at School each year have had early childhood care. There has been a lot of media coverage on this problem society is facing, as the future benefits of Early Childhood Care are not being recognised by parents and therefore many children are not gaining the essential pre-school skills they are expected to have.
When parents make the decision on whether or not to send …show more content…

Another spill-over effect is the greater availability of parents to be used as skilled workers in the labour force, as they do not need to look after their children while they are at an early childhood education centre. These positive externalities of the consumption of Early Childhood Care will lead to higher productivity in New Zealand firms, decreasing their costs of production and therefore increasing supply, leading to growth of the New Zealand economy. These externalities must be taken into account when considering the social marginal benefit, as this is the sum of the private benefits of consumption and the benefits to society. The benefit from the more efficient labour force will be added to the private benefits (such as the child’s education), to give the social marginal benefits. This can be shown on the market model below by the social marginal benefit curve being above the marginal utility / private marginal benefit curve. This is because for every additional unit of childcare consumed, there is a spillover benefit to society that is not considered by the consumer (parents sending their children to Early Childhood Care). Without government intervention and without consumers having internalised the social benefits of Early …show more content…

However, if the government implements a tax on snapper that is sold, there would be no limit to the how much recreational fishermen could catch. This would then be a problem as many more people would fish for snapper and catch more than they need, sharing it around the community. Overfishing would remain a problem, and the tax would not be able to stop this. Therefore this form of government intervention is not as appropriate as a quota in this case, as a quota can be applied to the number of fish caught (both commercial fishermen and recreational fishermen), instead of sold. Even though the government will incur a cost to monitor the levels of fishing, it is still the best way to make producers of snapper internalise the social costs of their

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