Page 10 - IDEA Study 4 2017 Public financing for pre-school places

Public Revenue

Creating additional places in pre-school facilities can bring benefits for public budgets,
due to increased personal income tax revenue, as well as the mandatory social security
and health insurance contributions due to the parent’s (usually the mother’s) return
to the labor market thanks to the child’s placement in a pre-school facility. Obviously, this
scenario counts with the probability of the mother’s return to work. Not every mother
whose child is admitted to a pre-school facility returns to work, either due
to unwillingness to find employment, or because her original job position no longer exists.
Therefore, we have also conducted a sensitivity analysis, demonstrating the extent
to which the results depend on estimating the probability of the mother’s return to
work.10 For the purpose of our calculations, we assume that any additionally placed child
belongs to the 3-5 age group, which is currently the dominant age group in all pre-school
facilities.11 The families relevant to our calculations therefore include those families with
a non-working mother and at least one child aged 3-5 who does not attend pre-school.

Even if a child is granted a place in a pre-school facility, the mother’s return to work
depends on the age and number of the child’s siblings in pre-school age. We assume that
if the child has at least one sibling under the age of 3, placing the older sibling in a pre-
school facility will not lead to the mother’s return to work. Most likely, the mother will
choose to stay at home to care for the younger sibling. In the case of families without
a sibling under the age of 3, we assume that placing a child aged 3-5 in a pre-school
facility will result in the mother’s return to work. If there is more than 1 child aged 3-5
in the family, we assume that the mother will return to work only if all such children are
admitted to a pre-school facility. Table 2 summarizes all of the above situations. We have
divided the relevant families, i.e. those with at least one child aged 3-5, in two groups:

Family type 1: No child under the age of 3

Family type 2: At least one child under the age of 3

10 Estimates in various studies (e.g. Busse et al., 2016) have shown that mothers whose children have
reached 3 years of age are more likely to return to work if their child has been admitted to a pre-school
facility.
11 In the school year 2014/2015, children aged 3-5 represented 84% of all children in pre-schools, 2-year-old
children represented 10%, and 6-year-old children represented 6% of all children in pre-schools.

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