Costs, Output, and Institutional Differentiation in Danish Childcare Policy

Investigating differences in costs due to institutional differentiation is of central importance, since most public sectors struggle with limited resources combined with high demands. Similar public services produced in different institutional set-ups constitute excellent units of observation, since the production costs can be directly compared. An example of such services is found in Denmark, where the municipalities provide two types of public childcare arrangements. All Danish municipalities, to varying degrees, offer the cheaper type, namely day-care homes. It is, however, remarkable that day-care centers and day care in private homes coexist in the same municipality with a cost difference of about 40 percent. Using the framework of rational institutionalism, this article claims that the institutional set-ups in the two kinds of childcare result in different employee strategies, which, together with varying sector strength, lead to widely different costs. The case is established by an analysis of interviews with employees, politicians and users of childcare services, combined with statistical evidence from the Danish municipalities.