Reduction of Child Poverty in Serbia: Improved Cash-Transfers or Higher Work Incentives for Parents?

Abstract

Based on the 2013 Serbian Survey of Income and Living Conditions (SILC) and on the Serbian version of the EUROMOD platform, we evaluate the poverty and distributive effects on children of various reform (benefit and employment) strategies concerning the two major social benefit programs in Serbia: child allowance and social monetary assistance. Both the first and second-order effects of the proposed reforms are considered. For the second-round impacts, a structural labour supply model on parents has been estimated. Our results show that a benefit strategy (which also combats fiscal evasion) is preferred to an employment strategy which aims at raising the work incentives by parents.

Keywords: Child Poverty, Tax and Benefit Reforms, Labour Supply, Serbia

JEL Classification: J22, J13, J18