The Finnish child day care system has had two alternative public provisions in the mid-1980s after the parental leave period: a subjective right to public child day care or cash for care (child home care allowance) until the child is 3 years of age. The elderly siblings of the youngest child, if cared for at home, are entitled to a smaller siblings’ allowance until they start obligatory education. The right to child day care concerns all children before obligatory education (7 years of age). The forms of public support for child care have continuously been in public debate, some people demanding a longer period and higher allowance for the parents (mothers) to care for a child at home after the parental leave whereas others demand a longer parental leave and greater gender equality in child care. In spring 2012 the controversy concerned the Government’s plan to cut the home care allowance period by one year, for children below 2 years of age. Cutting public transfer expenditure was one justification, the other being increasing mothers’ labour market participation. That plan was never introduced but halving the allowance period between the parents has been suggested by the Government in 2013. In spite of high-tempered public discussion very few calculations about potential outcomes have been presented. Also the current static microsimulation models seemed not very useful in capturing the scope of even immediate impacts of these kinds of reforms. This paper has two motivations. The first motivation was a lack of micro-macro level analyses of po-tential outcomes of a possible reform. Cutting home care allowance decreases cash for care costs, but may increase child day care costs, if the mothers are available to the labour market earlier than before. The second motivation is a wish to apply and develop a microsimulation model with new kind of data in preparation of different child care alternatives. The problem in the former models and data is a lack of child-based information about their actual care periods. This is the first attempt to utilize child based spell data of child home care allowance. As application the paper will present preliminary potential outcomes of cutting entitlements to child home care allowance by one year and discusses the strengths and limitations of the applied model and data
