In 2012 a huge public discussion on the so-called “Betreuungsgeld” emerged in Germany. “Betreuungsgeld” is a child care subsidy which was claimed to be introduced by the Bavarian party CSU. The design of this subsidy is the following: Parents that raise children aged between one and three years and don’t claim public financed kindergarten to support them, are eligible for a financial support in the height of 150€ per month. The eligibility is independent from income or other social transfers received. The law came into force on the 1st August 2013 but the discussion on that topic still continues.
According to the CSU the law is necessary to preserve parents’ freedom to choose whether to stay in job and send their children to kindergarten or stay at home to take care of their kids by themselves. Representatives of the CSU as well as the German chancellor Angela Merkel argued that this is only fair, because those parents that stay at home or send their children to a private kindergarten don’t strain the public budget by accepting the offer of a public financed capacity in a kindergarten.
This argumentation is comprehensible but it abstracts away from possible incentive effects. By supplying a subsidy on keeping children at home, incentives not send children to kindergarten are given. The questions that should have been answered before implementing the law is: Does the “Betreuungsgeld” decrease parents’ willingness to send their children to kindergarten and, if yes, does this have an impact on later education?
The question if “Betreuungsgeld” prevents parents from sending their children to kindergarten was answered by several studies. Results were alarming as data show that the subsidy especially provides an incentive to socially deprived families to keep their children at home. This is plausible regarding the fact that a transfer of 150€ is a relative small amount compared to the income of wealthy families whereas it is relatively high for low-income receivers. The conclusion drawn in a study of the German Youth Institute is that in the course of equal education opportunities for children “Betreuungsgeld” is contraindicated.
These findings are problematic if the visit of a kindergarten increases the probability of an educational success. It can be empirically shown that attendance in kindergarten may have “a long-lasting positive effect on educational chances” and that kindergarten non-attendance is associated with significantly lower probability to attend highest secondary school track.
Regarding this empirical evidence one should at least be suspicious on the effect of the “Betreuungsgeld” on educational equality of children with different social backgrounds. The subsidy has a negative incentive effect on the willingness of parents to send their children to kindergarten, especially regarding socially deprived families. As especially kids coming from low-income backgrounds may profit by going to kindergarten as it enhances their educational chances, this is a negative impact of the “Betreuungsgeld”. Of course the argument that it enhances parents’ freedom of choice is true, but for children’s welfare and later educational career it could be debilitating and this should be in focus of political reflections.
 First with a transfer of 100€ per month. Since 1st of August 2014 it increased to 150€.