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Two Steps Forward—One Step Back? Evaluating Contradicting Child Care Policies in Germany

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  • Kai-Uwe Müller
  • Katharina Wrohlich
Abstract
We apply a structural model of mothers’ labor supply and child care choices to evaluate the effects of two child care reforms in Germany that were introduced simultaneously. A legal claim to subsidized child care became effective for children aged 1 year or older. Moreover, a new child care allowance (‘Betreuungsgeld’) came into effect. It is granted to families who do not use publicly subsidized child care. Both reforms target children of the same age group and are unconditional on parents’ income or employment status, yet affect mothers’ incentives for labor supply and child care choices differently. Our model facilitates estimating the joint reform impact as well as disentangling the individual effects of both policies. A new comprehensive data set with information on labor supply, the use of and potential access restrictions to various child care arrangements is used. We find the overall effect of both reforms to be small but positive as far as mother’s labor supply and the use of formal care is concerned. The legal claim’s positive impact on mothers’ labor supply and the use of formal child care is largely offset by the negative effect on both outcomes resulting from the introduction of the child care allowance.

Suggested Citation

  • Kai-Uwe Müller & Katharina Wrohlich, 2016. "Two Steps Forward—One Step Back? Evaluating Contradicting Child Care Policies in Germany," CESifo Economic Studies, CESifo Group, vol. 62(4), pages 672-698.
    • Handle: RePEc:oup:cesifo:v:62:y:2016:i:4:p:672-698.
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    Cited by:

    1. Geyer, Johannes & Haan, Peter & Wrohlich, Katharina, 2015. "The effects of family policy on maternal labor supply: Combining evidence from a structural model and a quasi-experimental approach," Labour Economics, Elsevier, vol. 36(C), pages 84-98.
    2. Mara Barschkett, 2022. "Age-specific Effects of Early Daycare on Children's Health," Discussion Papers of DIW Berlin 2028, DIW Berlin, German Institute for Economic Research.
    3. Müller, Kai-Uwe & Wrohlich, Katharina, 2020. "Does subsidized care for toddlers increase maternal labor supply? Evidence from a large-scale expansion of early childcare," Labour Economics, Elsevier, vol. 62(C).
    4. Klaus Hurrelmann & Stefan Sell & Miriam Beblo & Notburga Ott, 2015. "Debatte um das Betreuungsgeld: Falsche Anreize für eine moderne Familienpolitik?," ifo Schnelldienst, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 68(11), pages 07-19, June.
    5. Pietropoli, Ilaria & Triventi, Moris, 2023. "What drives early childhood education attendance? The role of structural factors and personal beliefs in Germany," Children and Youth Services Review, Elsevier, vol. 150(C).
    6. Thoresen, Thor O. & Vattø, Trine E., 2019. "An up-to-date joint labor supply and child care choice model," European Economic Review, Elsevier, vol. 112(C), pages 51-73.
    7. Müller, Kai-Uwe & Neumann, Michael & Wrohlich, Katharina, 2018. "The family working-time model: Towards more gender equality in work and care," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 28(5), pages 471-486.
    8. Boll, Christina & Lagemann, Andreas, 2017. "Public childcare and maternal labour supply: New evidence for Germany," HWWI Research Papers 180, Hamburg Institute of International Economics (HWWI).
    9. Ulrike Unterhofer & Katharina Wrohlich, 2017. "Fathers, Parental Leave and Gender Norms," Discussion Papers of DIW Berlin 1657, DIW Berlin, German Institute for Economic Research.
    10. Jochimsen, Beate & Fendel, Tanja, 2022. "Home Care Allowance and Labor Market Participation of Immigrant and Native-Born Mothers," VfS Annual Conference 2022 (Basel): Big Data in Economics 264104, Verein für Socialpolitik / German Economic Association.
    11. Averkamp, Dorothée, 2024. "The Gender Wage Gap, Labor-Market Experience, and Family Choices: Lessons from East Germany?," VfS Annual Conference 2024 (Berlin): Upcoming Labor Market Challenges 302347, Verein für Socialpolitik / German Economic Association.
    12. Daniel Brüggmann, 2020. "Women’s employment, income and divorce in West Germany: a causal approach," Journal for Labour Market Research, Springer;Institute for Employment Research/ Institut für Arbeitsmarkt- und Berufsforschung (IAB), vol. 54(1), pages 1-22, December.
    13. Mara Barschkett, 2022. "Age-specific Effects of Early Daycare on Children’s Health," Berlin School of Economics Discussion Papers 0005, Berlin School of Economics.
    14. Barschkett, Mara, 2023. "Age-specific Effects of Early Daycare on Children's Health," VfS Annual Conference 2023 (Regensburg): Growth and the "sociale Frage" 277588, Verein für Socialpolitik / German Economic Association.

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    More about this item

    Keywords

    family policy; labor supply; child care; policy evaluation; structural model;
    All these keywords.

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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