Consequences of mixed provision of child care: An overview on the German market

Universal child care that is available, affordable and of good quality is regarded as a key instrument of a country's social and labor market policy. As full public involvement in the provision of child care is costly, licensing non-public providers can enlarges parental choice and relieve public funds. This paper analyzes the consequences of universal, mixed-market provision of child care for availability and quality by directly comparing public providers to various non-public providers such as welfare organizations, churches and commercial providers. Controlling for regional and socio-demographic differences in participation, results show that non-religious and in particular commercial providers serve the under three-year-olds and respond to the demand for full-day care. Furthermore, they employ more personnel with a tertiary education. Hence, commercial providers can - at least when covering rather low market shares - increase parental choice and contribute to the provision of high-quality child care.