The study incorporated three areas of concern. Literature and research findings related to day-care focussed on the social-emotional effects of attendance. It was found that fears regarding harmful consequences of mother-child separation and multiple caretakers were not substantiated. Although many findings were equivocal, there was considerable evidence indicating beneficial outcomes of day-care. In particular, prosocial behaviours were found to be improved. An important variable in day-care is interaction with peers. The nature of peer influence on children's social development was, however, largely theoretical. It was concluded that peer experiences should facilitate the loss of eogcentrism and coincident increase in empathy in preschool children. Emphasis was placed on the recent change in viewpoint that the preschool child is not necessarily egocentric but capable of responding empathically. Empathy in children was found to be influenced by socialisation experiences and prosocial behaviours were linked, at least theoretically, to empathy. "Cognitive" empathy was within the capabilities of young children and defined as understanding what another person is feeling. The aim of the study, therefore, was to investigate cognitive empathy of children attending day-care. Borke's (1971) Interpersonal Perception Test was used to measure empathy in sixty day-care children (30 male and 30 female) between three and four-and-a-half years of age. Social and interpersonal skills were assessed by a Social Behaviour Rating Scale and the PPVT served as a measure of verbal intelligence. Factors included in the design were length of stay in day-care (NEW, OLD, XOLD), age (3yr.old, 4yr old), sex and a retest after twelve weeks of day-care attendance. Results were analysed in terms of a 5 x 2 (Treatments x Sex) design with length of stay in day-care and age defining treatment classifications. The results indicated that children who had attended day-care for some time were more empathic than children who had not had this experience. Empathy was found to increase with age but there were no differences between male and female children. The extent to which children were empathic was found to be related to their prosocial behaviours and interpersonal skills. Although increases in empathy over the test-retest interval were slight, NEW children showed a greater development in empathy than OLD children. The results also showed that empathy varied with the emotion being identified and there were differences between item - correctness and response - correctness. The study supported the idea that day-care can be a growth-enriching experience and can promote the development of empathy. It is implied that early interaction with peers is the factor largely responsible for improved social development. Finally it was suggested that child-rearing and formal education have great potential for facilitating prosocial behaviours and empathy by offering socialised activities and experiences. Given the implications of this for behaviour modification, especially aggression and violence, it seems particularly important that direct attention be given to facilitating mature levels of empathy and social development.