Context specificity of childcare out-of-pocket costs and child-contingent benefits

This deliverable set out to analyse the context-specificity of financial support policies for families with children and (out-of-pocket fees for) childcare services, two policy areas that feature prominently in rEUsilience recommendations (Daly et al., 2025). Our first question was to what extent child-contingent benefits compensate for the out-of-pocket costs of formal childcare services at different income levels. Based on our newly introduced compensation ratio measure, we showed that the combination of child contingent benefits and out-of-pocket costs tends to be low-income targeted, in the sense that lower-income families pay lower fees for childcare and/or receive higher benefits. In Poland and Sweden, the out-of-pocket expenses for childcare tended to be lower (on average) across the income distribution than child-contingent benefits, whereas high-income families in Belgium and Spain paid more for childcare than they received as financial support. Secondly, we asked to what extent child-contingent benefits compensate for the out-of-pocket costs of formal childcare services for different family types. Here, we found that generally (with the exception of Spain) families with more children receive higher child-contingent benefits relative to their out-of-pocket costs for childcare, compared to families with fewer children. In all the four countries studied here, single-parent families receive higher child-contingent benefits relative to their out-of-pocket costs for childcare, compared to two-parent families. Finally, we asked to what extent child-contingent benefits compensate for the out-of-pocket costs of formal childcare services when families transition into work. Here, we found that, generally, the compensation ratio was higher for families on social assistance or employment at low wages, compared to families working at higher wages. This holds for single-parent families (with the exception of Poland) as well as two-parent families. Moreover, the extent to which the compensation rate was lowered with employment and at higher wage levels differed between countries, with the drop particularly notable in Belgium and moderate to absent in Poland. For average wage employees, the compensation ratio was lowest in Belgium compared to the other countries included here.