The beneficiaries of childcare expansion

This paper investigates how expansion of the supply of childcare is likely to change the use of childcare services and especially the extent to which the social imbalance in its use is corrected. The empirical case at hand is Flanders, the largest region of Belgium, which has a comparatively speaking large offer of formal childcare slots, but continues to struggle with excess demand and uneven access. The latter is crucial for policy makers. Is rationing to be blamed for the underrepresentation of certain social groups in formal childcare or is an explanation to be found in other circumstances such as poor employment prospects or more traditional family values? In this paper we simulate a simple expansion of the number of formal childcare slots and investigate its consequences, in terms of how this expansion affects the use of both formal and informal childcare, keeping all other circumstances constant. We show that a large increase in use can be expected for those groups that are currently underrepresented in the formal childcare sector, even without a change in the mix of subsidised and non-subsidised service providers and without other contextual changes (e.g. maintaining the small monetary gain from paid employment for low-skilled mothers when making use of formal childcare at its current prices). Yet, we also show that while the social gap is narrowed, the childcare sector cannot be expected to close the gap entirely by itself. Furthermore our estimates suggest that the expansion of formal childcare is likely to result in part-time combinations of formal and informal care, rather than in complete crowding-out of informal care.