When rationing plays a Role

Our study explores the impact of selection criteria on the costs and benefits of early child care for mothers’ employment, child development, and municipalities’ revenues by exploiting the selection criteria of different Italian municipalities in assigning child care slots. In Italy, only around 13% of the demand for public child care coverage is met, and the number of applications exceeds the number of places in child care services in all regions. In conditions of excess demand, municipalities introduce selection criteria to give priority to families for whom access to public child care appears to be more valuable. We analyse through simulations the consequences of introducing different selection criteria, using a representative Italian sample of households with children under three years of age (EU-SILC), and the selection criteria employed by six representative Italian municipalities. Our results have interesting policy implications. The benefits for child outcomes and mothers’ employment are stronger in municipalities where the selection criteria give priority to more disadvantaged households. However, in these contexts selected households are less able to contribute to the financial sustainability of the service.