The Impact of Pensions, Transfers and Taxes on Child Poverty in Europe: The Role of Size, Pro-Poorness and Child Orientation

Socio-Economic Review, 2017, vol 15(4), pp. 745-775, DOI: 10.1093/ser/mww045

Posted: 2 May 2017 Last revised: 10 Sep 2018

See all articles by Ron Diris

Ron Diris

Maastricht University

Frank Vandenbroucke

University of Amsterdam

Gerlinde Verbist

University of Antwerp

Date Written: January 1, 2017

Abstract

We assess the impact of redistributive policy on child poverty across 29 European welfare states, using EU SILC 2005–2012. We distinguish between spending on pensions, spending on other cash transfers and taxation. For each of these instruments of redistribution, we further distinguish three features: size, pro-poorness and targeting towards households with children. Pensions are generally neglected in analyses on child poverty, but are relevant through the presence of two, partially offsetting, forces. Increased pension spending weakens the relative income position of children, but pensions also substantially contribute to the household income of children from multigenerational households. This ambiguous result signals a challenge: while reductions in pension spending may be desirable in the long run in several European welfare states, policymakers — especially in Southern and Eastern Europe — should be aware that this not only directly involves income losses for the elderly, but also for a non-negligible share of (predominantly poor) children.

Keywords: Poverty, Europe, Welfare State, Redistribution, Social Policy

JEL Classification: H53, I32, I38

Suggested Citation

Diris, Ron and Vandenbroucke, Frank and Verbist, Gerlinde, The Impact of Pensions, Transfers and Taxes on Child Poverty in Europe: The Role of Size, Pro-Poorness and Child Orientation (January 1, 2017). Socio-Economic Review, 2017, vol 15(4), pp. 745-775, DOI: 10.1093/ser/mww045, Available at SSRN: https://ssrn.com/abstract=2961181

Ron Diris

Maastricht University ( email )

P.O. Box 616
Maastricht, 6200 MD
Netherlands

Frank Vandenbroucke (Contact Author)

University of Amsterdam ( email )

Spui 21
Amsterdam, 1012 WX
Netherlands
+31 (0)20 525 6037 (Phone)

Gerlinde Verbist

University of Antwerp ( email )

Prinsstraat 13
Antwerp, Antwerp 2000
Belgium

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