The Local Politics of Social Investment Under Fiscal Constraints: The Case of Childcare Expansion in Germany

Embedded in a broader discourse on future-oriented social policy and the idea of a social investment welfare state, governments in many of the advanced economies expanded childcare in recent years. Yet, in many countries considerable regional variation exists in coverage rates and expansion efforts, and often the supply of childcare still does not match demand. In this paper, we explore the politics of this regional variation by studying Germany, a country which had relatively low rates of childcare coverage for a long time, but recently introduced a legal entitlement to childcare. Despite this legal entitlement, we argue that local political and economic factors (continue to) matter for childcare expansion. We expect left-wing local political majorities to be associated with stronger expansion dynamics. At the same time, tight local fiscal constraints, which are widespread in Germany’s fiscal federalism, should limit partisan room for maneuver and party effects, and should slow down expansion. Analyzing local-level data on childcare coverage rates, socio-economic context factors and government partisanship, we find empirical support for our expectations. Building on these findings, we furthermore examine how local governments reconcile gaps in childcare provision with the legal entitlement to childcare and what distributive consequences this has.