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

  • Kreyenfeld, Michaela

    ()

    (Max Planck Institute for Demographic Research)

  • Spiess, C. Katharina

    ()

    (DIW Berlin)

  • Wagner, Gert G.

    ()

    (DIW Berlin)

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.

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File URL: http://ftp.iza.org/dp198.pdf
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Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 198.

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Length: 28 pages
Date of creation: Sep 2000
Date of revision:
Publication status: published in: European Early Childhood Education Research Journal, 2003, 11 (2), 159-175
Handle: RePEc:iza:izadps:dp198
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  1. 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.
  2. 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.
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