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

ABSTRACT Governments in many of the advanced economies expanded childcare, an exemplary social investment policy, in recent years. Yet, considerable regional variation exists in expansion efforts, and often the supply of childcare still does not match demand. We explore the politics of this regional variation by studying Germany, a country that 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 and regional variation in coverage. We expect left‐wing local political majorities to be associated with higher expansion and coverage rates. At the same time, tight local fiscal constraints should limit partisan room for maneuver and should slow down expansion. Analyzing local‐level data on childcare coverage rates, socioeconomic context factors, and government partisanship, we find evidence of conditional effects between fiscal and partisan variables. We furthermore examine how local governments reconcile gaps in childcare provision with the legal entitlement and what distributive consequences this has.