Overall economic benefits of expanding childcare
The analysis estimates the additional costs that would be associated with an expansion of childcare. It simulates an increase in the childcare rate for under-threes to the extent of reaching the Barcelona target of 33% or by 10 or 20 percentage points and an increase in the average opening hours of childcare facilities by one hour or two hours.
To estimate the additional costs, the statistically identified correlations are transferred to policy scenarios for an expansion of childcare. The starting point for estimating the additional costs is public expenditure on childcare. The total public expenditure amounts to around 2.9 billion euros. According to Statistics Austria, the childcare rate for the under-threes is 27.6%, which is around 5.4 percentage points below the Barcelona target of 33%. The average opening hours of the facilities are just over 9 hours. The results show a moderate increase as a result of the policy scenarios. An extension of the average opening time by one hour is accompanied by an increase in public expenditure of around 180 million euros from 2.9 billion euros to 3.1 billion euros. The realization of the Barcelona target of a childcare rate of 33% causes an increase in expenditure of around 240 million euros in the cost estimate.
The second step involved an analysis of the fiscal and other effects of expanding childcare and extending opening hours. In the short term, the expansion increases employment and the number of hours worked. The expansion of opening hours is also associated with an increase in hours worked. In both scenarios, the additional employment leads to an increase in market income and the associated government revenue from direct and indirect taxes and other levies. Furthermore, additional purchasing power is generated which, minus the savings rate, is almost entirely consumed. Taking into account the additional purchasing power, the total effects exceed the costs of the expansion. This applies in each of the calculated scenarios. Depending on the expansion scenario, the additional state revenue from the expansion amounts to between EUR 153 and 567 million, or EUR 166 million in the scenario with longer opening hours. In addition, consumption increases by between 220 and 815 million euros.
In addition to short-term fiscal effects, there are long-term positive effects on economic performance, primarily through higher educational qualifications and the associated increase in productivity. In addition, the expansion of childcare has positive effects on fertility. In the long term, this leads to an easing of the age-related burden on public finances.
