Access to Childcare Services: The Role of Demand and Supply-Side Policies

Different demand-side or supply-side instruments can be used in order to encourage the use of formal childcare. With the budgetary constraints of the last two decades, some countries have changed their childcare policy leading to the implementation of demand-side rather than supply-side instruments. The introduction of demand-side subsidies to encourage the use of formal childcare services was a major change in Belgium since, until 1988, subsidies were directly granted to childcare services providers in order to reduce their running costs. The purpose of this paper is to analyze the impact of both demand-side and supply side subsidies on the use of formal childcare by low-income families. From this perspective, we analyzed, on the one hand, the effect of the tax deduction instrument implemented in Belgium and, on the other hand, the effect of an increase in the provision of childcare places on the use of formal childcare services. We found that the choice of policy instruments is not neutral in terms of access to formal childcare for families belonging to different income groups. Indeed, while a higher supply of childcare places increases the probability of access for low-income families, the tax deduction can have a mixed outcome as far as access to childcare is concerned.