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

28 Pages Posted: 30 Nov 2000

See all articles by C. Katharina Spiess

C. Katharina Spiess

German Institute for Economic Research (DIW Berlin)

Michaela Kreyenfeld

Max Planck Institute for Demographic Research

Gert G. Wagner

German Institute for Economic Research (DIW Berlin); Berlin University of Technology; German Socio-Economic Panel Study (SOEP)

Date Written: September 2000

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.

Keywords: Child day care, child care subsidies, distributional effects, social policy

JEL Classification: D1, D3, H2, H4

Suggested Citation

Spiess, C. Katharina and Kreyenfeld, Michaela and Wagner, Gert G., A Forgotten Issue: Distributional Effects of Day Care Subsidies in Germany (September 2000). Available at SSRN: https://ssrn.com/abstract=252002

C. Katharina Spiess

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany

Michaela Kreyenfeld

Max Planck Institute for Demographic Research ( email )

Doberaner Str. 114
Rostock 18057, 53113
Germany

Gert G. Wagner (Contact Author)

German Institute for Economic Research (DIW Berlin) ( email )

Mohrenstraße 58
Berlin, 10117
Germany
+49 30 8 978 9290 (Phone)
+49 30 8 978 9200 (Fax)

HOME PAGE: http://www.diw.de/programme/jsp/MA.jsp?language=en&uid=gwagner

Berlin University of Technology ( email )

Straße des 17
Berlin, 10623
Germany
+30 8 978 9283 (Phone)

German Socio-Economic Panel Study (SOEP) ( email )

DIW Berlin
10108 Berlin, Berlin
Germany
+49 30 8978 9290 (Phone)
+49 30 8978 9109 (Fax)

HOME PAGE: http://www.diw/en/soep

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