This article analyzes the efficiency in the provision of child care services at the municipal level and identifies the main determinants of inefficiency. We use a unique data set on the local child care expenditures in the eastern German State of Saxony. The analysis is performed in two stages. First, we measure the efficiency by using a Data Envelopment Analysis (DEA). Second, we consider political, fiscal and demographic variables in a truncated regression to identify the determinants of inefficiency. We find substantial differences in efficiency; the median municipality is up to 28% inefficient in expenditures on child care. Explanatory variables such as an uncompensated mayor or a larger share of over 65-year olds significantly increases inefficiency.
Child care efficiency analysis municipalities service provision