Care of children in a low fertility setting: Transitions between home and market care for pre-school children in Germany

Because it may affect a nation's fertility, child care policy is an important policy instrument for low-fertility countries. Designing an effective policy requires an understanding of the determinants of demand for child care. This study uses a descriptive statistical approach to analyze the dynamics of demand for child care for pre-school children in Germany. Age-specific and duration-specific hazard rates for leaving home care and for leaving market care are calculated for various risk groups. Hazard rate differences across risk groups indicate the presence of important factors affecting transitions. We examine household characteristics, the mother's employment status, and regional supply. We find that households with working mothers and fewer pre-school children have greater demand for market care. There also appears to be excess demand for market care. The hazard rates of subsequent children do not differ significantly from those of the first child.