The excess demand for subsidized child care in Germany

Abstract

The extension of publicly provided or subsidized child care is currently one of the priorities of the political agenda in many European countries. In this article, the excess demand for subsidized child care slots in Germany is estimated using a partial observability model. The results show that there is considerable excess demand for child care for children aged less than 3 years in East and West Germany, even among children with working mothers.

Acknowledgements

This research project was funded by the Thyssen Foundation in the research project ‘Labor Market and Welfare Effects of Family Policy in Germany’. I would like to thank M. Csillag, P. Haan, C. Langer, M. Myck, C. K. Spiess, V. Steiner, A. Uhlendorff and T. Viitanen, as well as participants of the ‘Berlin Network of Labour Market Research’ seminar for helpful comments and discussions on an earlier draft. The usual disclaimer applies.

Notes

¹ See Plantenga (2004).

² See Rosenfeld et al. (2004) for a detailed description of women's employment patterns in the two German states before reunification.

³ Official statistics show that on average, there are 3 slots available for 100 children under the age of three. On the other hand, 6% of all households with children under three years in the SOEP report that their child is in a child care facility. This difference might be due to the fact that some facilities take more children than they are officially allowed to. Another explaination would be that some children are in a form of child care that is ‘institutional’ but not counted by official statistics. This might particularly be the case in the growing sector of family day care, which is increasingly also subsidized by communities but not counted as slots in child care facilities in the official statistics. Note that child care by private babysitters or childminders is not counted as ‘in child care’ in this table.

⁴ The reason why in this analysis, the focus is on child care and mother's employment and other characteristics of the mother is the fact that in Germany, in the large majority of all families, housework and child care is still undertaken by the mother and not the father (see e.g. Steinnach, 2004).

⁵ For a detailed description of Germany's child care institutions see Evers et al. (2005).

⁶ There might of course be also other reasons why parents prefer institutional child care over the private sector, for example, if they expect the child care quality to be higher in the institutional sector. However, due to lack of data, quality issues are not taken into account in my analysis.

⁷ The question of why an excess demand exists in the child care market and whether the supply of child care is endogenous with respect to mothers’ employment rates is not analysed in this article. Stutzer and Duersteler (2005) provide an interesting investigation of this question for the case of Switzerland.

⁸ See e.g. Choné et al. (2003) for France, Del Boca et al. (2004) for Italy, Kornstad and Thorensen (2007) for Norway, Lokshin (2004) for Russia.

⁹ A detailed literature survey on German studies can be found in Büchel and Spieß (2002).

¹⁰ There are 440 counties in Germany. It is assumed that children are not restricted in their access to child care slots if there are more or equal to 99 slots per 100 children in the county.

¹¹ Note that this likelihood function is not the same as the one used by Abowd and Farber (1982). In their application, demand and supply of the possibly restricted part of the sample is specified as the product of the two corresponding probabilities rather than a bivariate distribution.

¹² For more information on the SOEP, see http://www.diw.de/english/sop/

¹³ I thank DIW Berlin for the special permission to use the regional code number at the county level.

¹⁴ I would like to thank H. Bayer from the Deutsches Jugendinstitut for the provision of this data.

¹⁵ For more information on these data, see Bundesamt für Bauwesen und Raumordnung (2002).

¹⁶ This result is not surprising since child care utilization for children older than three years is common in Germany even for children with nonworking mothers (Section II).

¹⁷ It should be noted, however, that rationing of child care services has more than one dimension: in addition to access restrictions to child care services, short opening hours, e.g., only in the morning, also poses a problem in many regions of Germany. This is particularly true for children between three and six years. This dimension of rationing has not been studied in this analysis.

¹⁸ In the SOEP questionnaire, nonworking persons are asked ‘Do you intend to engage in paid employment (again) in the future?’. The possible answer categories to this questions are ‘No, definitely not’, ‘Probably not’, ‘Probably’ and ‘Yes, definitely’. After that, people are asked ‘When, approximately, would you like to start with paid employment?’ and the possible answers are ‘As soon as possible’, ‘Next year’, ‘In the next two to five years’ and ‘In the distant future, in more than five years’.