> At some point it struck me that this is all labour, but there was no money exchanged for the services rendered and certainly no taxes collected. Even worse - without this our neighbours would have to take an inordinate amount of time off, as getting a babysitter was too expensive.

How is this bad?

Both your and their family benefited directly in terms of trading responsibilities and indirectly in building relationships between daughters and neighbors.

Is your concern that neither of you paid taxes?