Child Benefit and Child Poverty
CEFIR Working Paper No. WP/00/03
Posted: 12 Jan 2001
Date Written: October 2000
The purpose of the paper is to analyze the effects of changes in policy of child benefit provisions on child poverty. In particular, we examine whether the introduction of means-testing schemes in the regions has improved targeting of child benefits. We test whether the probability of being paid depends negatively or positively on income, and whether this probability increased between 1996 and 1998 for the poor part of the population. In addition to probability analysis, we use direct poverty analysis, i.e., we decompose the change in poverty into changes in child benefits, and other factors. We carry out a comparative analysis among three groups of regions which differ with respect to the approach chosen to identify the needy families with children. We pay special attention to the relative efficiency of a variety of means-testing schemes. We find that the probability of getting paid conditional on being poor improved between 1996 and 1998, particularly in the regions which introduced a simple income test. However, the overall impact of the changes in child benefit provision on child poverty was negative, i.e., it contributed to poverty increase, with the decrease in payments being the main cause of the trend. Our paper also finds that as a result of transfer of responsibilities of child benefit payments from the mother's employer to the social welfare offices, the correlations between payment probability and wage arrears weakened substantially. At the same time the relation between the presence of the social welfare office in the area of residence and the probability of getting paid has weakened as well. We conclude from these results that the overall institutional structure of the child benefits payments system improved during the period under study.
JEL Classification: H2, H7, I3
Suggested Citation: Suggested Citation