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A Forgotten Issue: Distributional Effects of Day Care Subsidies in Germany

Author

Listed:
  • Kreyenfeld, Michaela

    () (Hertie School of Governance)

  • Spiess, C. Katharina

    () (DIW Berlin)

  • Wagner, Gert G.

    () (Max Planck Institute for Human Development)

Abstract

In general child care subsidies are widely accepted as a means to create equal chances for mothers in the labour market as well as for children. Although there is a general consensus that the use of child care should be publicly supported, there is no consensus on how this should be done. Moreover, there is little knowledge on the distributional effects of child care subsidies. In order to assess whether public expenditures are targeted efficiently, it is, however, vital to know which social groups profit most from the public expenditures on children’s day care and if tax-payers money is spent effectively. In Germany, as in other European countries, child care subsidies are mainly provided ‘in-kind’. Local communities and NPOs provide child care slots for children, which are – except for a small fee - free of charge. In this study we estimate the distributional effects of state funded child day care in Germany using microdata of households and data on the expenditure of public funded child care. Major results are that child care subsidies only carry modest redistributional effects. In the first place, it is the middle income range that profits from the public provision of children’s day care. This contradicts common public policy recommendations, which state that low income families should be the first target of child care subsidies.

Suggested Citation

  • Kreyenfeld, Michaela & Spiess, C. Katharina & Wagner, Gert G., 2000. "A Forgotten Issue: Distributional Effects of Day Care Subsidies in Germany," IZA Discussion Papers 198, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp198
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    References listed on IDEAS

    as
    1. Siv Gustafsson & Frank Stafford, 1992. "Child Care Subsidies and Labor Supply in Sweden," Journal of Human Resources, University of Wisconsin Press, vol. 27(1), pages 204-230.
    2. David Blau, 2003. "Child Care Subsidy Programs," NBER Chapters,in: Means-Tested Transfer Programs in the United States, pages 443-516 National Bureau of Economic Research, Inc.
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    Cited by:

    1. World Bank, 2007. "Chile - County Gender Assessment : Expanding Women's Work Choices to Enhance Chile's Economic Potential," World Bank Other Operational Studies 7639, The World Bank.
    2. Colm Harmon & Claire Finn & Arnaud Chevalier & Tarja Viitanen, 2006. "The economics of early childhood care and education : technical research paper for the National Economic and Social Forum," Open Access publications 10197/671, School of Economics, University College Dublin.
    3. Marcus Dittrich & Wolfgang Gerstenberger & Beate Henschel & Gunther Markwardt & Carsten Pohl & Heinz Schmalholz & Marcel Thum, 2004. "Demographische Entwicklung im Freistaat Sachsen : Analyse und Strategien zum Bevölkerungsrückgang auf dem Arbeitsmarkt ; Gutachten im Auftrag der Sächsischen Staatskanzlei," ifo Dresden Studien, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, number 36, October.
    4. Joris Ghysels & Wim Van Lancker, 2010. "The unequal benefits of family activation: an analysis of the social distribution of family policy among families with young children," Working Papers 1008, Herman Deleeck Centre for Social Policy, University of Antwerp.

    More about this item

    Keywords

    social policy; distributional effects; child care subsidies; Child day care;

    JEL classification:

    • D1 - Microeconomics - - Household Behavior
    • D3 - Microeconomics - - Distribution
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • H4 - Public Economics - - Publicly Provided Goods

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