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YES! topic 2018

Organising an Efficient Allocation of Day-Care Spots for Children

by Nicolas Fugger, a researcher at ZEW Centre for European Economic Research in Mannheim.

Selected by BBS Wirtschaft Ludwigshafen

In May 2017, about 450 parents stood in line in front of a new day-care facility for children in Leipzig. Only 45 spots were available for under three-year-olds, and 120 for children of kindergarten age.

Even the police had to step in to keep the crowd from blocking the traffic. This situation openly displayed a situation that usually is not that visible. Despite the fact that every child has a right to a day-care spot, many parents have troubles finding such a spot. Many register for a spot right after the birth of their child, years before they need it.

It is crucial for many parents to provide day-care for their children because they want and often need to return to the job market. Moreover, since such a return needs quite some time of preparation and coordination with the employer, parents need a guarantee for their child’s care.

Currently, the application processes are complicated and lengthy. So the proper distribution process should consist of several criteria:

The parents should be able to decide when and which institution should care for their child.

The number of spots should be used efficiently.

Also, the parents must deliver a true set of facts from the parents regarding the distance to home or workplace and educational concept. False statements to get a spot in a particular institution must be prohibited. As a result, parents should be satisfied with the first offer they get for a spot because it would fit their requirements. Currently, many parents state their wishes to get a spot for a particular institution or wait for other offers, which leads to an advantage for parents who are better informed over others.

Also, the local authorities do also benefit from these facts because they can evaluate the need for long-term planning of day-care spots in specific areas.

From the perspective of the day-care institutions, the current process is too time-consuming and takes away staff from the actual work with the children. A centralised and coordinate procedure could reduce this time and effort significantly without restricting the freedom of choice by the institutions.

Studies show that parents and day-care institutions do not benefit from individual processes over a coordinated and centralised structure, which guarantees stability for the entire system. Such a system is called stable if neither parents nor institutions can improve their situation by making a deal outside of the process. Currently, that is often the case, and it leads to discontent by many parents.

The challenge for the students is to come up with a concept of a suitable process that takes into account both the parents‘ wishes and the needs of the day-care institutions to guarantee planning reliability. Ideas can be based on existing processes but should focus on specifics of distributing the spots for the children.

Fugger, Nicolas, Thilo Klein und Tobias Riehm
(2017), Dezentrale Kitaplatzvergabe ohne Warteschlange: Ein Leitfaden, ZEW policy brief
Nr. 17-04, Mannheim.

Al Roth, “Wer kriegt was – und warum? : Bildung, Jobs und Partnerwahl: wie Märkte funktionieren”. 2016.

Nicolas Fugger

Nicolas Fugger is a researcher in ZEW’s Research Group “Market Design” and a member of the Research Unit “Design and Behavior” at the German Research Foundation (DFG). Nicolas Fugger’s research interests lie in the area of market design. His research particularly focuses on applied auction theory and procurement design. One of his studies was published in the scientific journal “Management Science”.

Institution: ZEW – Centre for European Economic Research
YES! Participations: 2018