The introduction of market forces in the Dutch child care sector' Annmarie Marangos en Janneke Plant

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The introduction of market forces in the Dutch
child care sector. Annmarie Marangos en Janneke
Plantenga J.Plantenga_at_econ.uu.nl
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Introduction of the Child Care Act by 1 January
2005 - tripartite financial structure -
demand driven key role for parents Presumed
effects increase in internal and external
efficiencyHow about the exit and voice options
of parents?
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The market of child care developments 1995-2005
The supply of child care services -
concentration - entry barriers - prices -
diversity. The demand for child care services
- information - alternatives.
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Supply side concentration
Table 1. Child care suppliers, number of
locations and child care places
Source CBS (Statistiek kindercentra
(1995-2000) Statistiek welzijnswerk en
kinderopvang (2001-2003)
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• Supply side entry barriers
• Newcomers play a modest role in the market for
  child care Between March 2001 and April 2003
  circa 4500 child places were realised by new
  suppliers, while in this period the total supply
  increased with almost 40.000 child places.

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Supply side prices
Table 2 Hourly prices in the child care sector.

Source Deloitte, 2003, 2004, 2005
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supply side diversityLittle information on
supply of additional servicesLengthened opening
hours 10 of market Flexible care 3 of market
24 hours care 0.2 of market No clear trend

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In summary - Clear trend towards centralisation
- Analysis of the growth indicates that the
market is not very accessible market - The
prices have increased but seem rather stable
by now - No clear trend towards innovative
products.
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Demand side information A real risk that
parents overestimate the quality Little
knowledge of costs nor actual prices In 2004,
around 50 of the parents knew the sum they have
to pay monthly for the formal childcare by child.
A quarter only knows the total sum they could
not subdivide the costs to each child. More than
14 has no idea.
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Demand side available alternatives
Tabel 3. Choices of parents with children in the
age category 0-12 number of facilities
available within 10 minutes, 2005.

Source SEO 2005.
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Demand side available alternatives
Table 4. Number of choices within the same child
care form, according to parents

Source SEO, 2005 monitor kinderopvang Deloitte
Touche, bewerking SEO/UU
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Demand side high switching costs?
Table 5. When would you consider switching to an
alternative supplier? (n838)

Source SEO 2005.
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High switching costs due to loyalty Loyalty
in the child care market is important because -
the service is provided for parents as well as
for children - the relationship between
demander and supplier is personal - the
relationship is long term, but
temporaryLoyalty weakens exit and strengthens
voice
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Added value of the introduction of market
forces? - More uniformity- Consumers provide
information on actual need The introduction of
demand financing not only serves the interest of
parents, but also solves the information problem
of the government. The citizen hás to choose,
because only then necessary information becomes
available.