This report quantifies the micro-economic effects of introducing a child care benefit ("Betreuungsgeld") for children less than three years old in Germany on both the parental labour supply and child care arrangements. The "Betreuungsgeld" consists of a lump-sum allowance to parents who do not utilize publicly subsidised child care facilities.

The first section of our study presents statistical evidence on observed effects from Finland, Norway and the federal state of Thuringia, which have already introduced similar measures. However, the main focus of the report is the ex-ante simulation of the effects of a Germany-wide introduction of the "Betreuungsgeld". The microeconomic simulation model we use is described in the second section of our study. The last section presents the results.

In addition, a summary of the study is available for download as PDF-File (about 408 KB).