Cost-benefit analysis of family day-care facility networks

Family day care facilities provide a reasonable alternative to families who cannot use traditional kindergartens or nurseries due to capacity constraints. This project evaluated the cost effectiveness of family day care facilities operated in networks. 

Our analysis shows that family day care service is more effective if operating in a network. Investing in a network is cost-effective in medium run, or, even in the short run in the case of urban settings.

According to our recommendation on the optimal financing model of family day-care, the largest share of the costs should be financed from the state budget, while municipalities can contribute on a voluntary basis. Employers can contribute by taking over the parents’ share and claim a tax-refund, while parents would pay a certain fraction of the flat rate parental leave benefit, depending on the child’s age.

The Budapest Institute provided external expertise to the project “Capacity Building of the Family Day-Care Centres” coordinated by Fehér Kereszt Baráti Kör Public Benefit Organisation (FKE).