The redistributive effects of family policies

Report

The redistributive effects of family policies

Olga Cantó and Andrea Sobas, Universidad de Alcalá;

Spain has one of the highest child poverty rates of all European countries. The two main characteristics of its system of benefits and taxes are the considerable redistributive weight of pensions and the lack of budgetary weight of fiscal deductions and benefits designed with families in mind. In other European countries, there are all kinds of policies that promote social cohesion and reduce the risk of poverty for families with dependent minors, an example of this is that the universal child benefit is today in force in 17 of the 28 countries of the European Union. Using economic evaluation methods, we measure the efficacy, efficiency and the budgetary cost of setting up different public policies that could help to promote social cohesion between generations. The results point towards improvements in the current policy up to a sum of, at least, some 100 euros per month or the introduction of a universal benefit of a similar amount would be very effective for reducing the risk of child poverty.
Key points
  • 1
       In 2017, nearly one in every three minors in Spain was at risk of poverty, which would position it among the countries of the European Union most affected by this problem, together with Rumania, Bulgaria, Italy and the United Kingdom.
  • 2
       A clear positive relationship exists between the level of risk of child poverty and the public economic effort of each country in terms of family benefits. The majority of countries with high levels of child poverty in the European Union are also those that make a smaller budgetary effort in these transfers.
  • 3
       The increase in child poverty during the economic recession is linked to the lack of a stable and powerful network of public policies that enable families to maintain minimum income levels when unemployment and labour precarity grow.
  • 4
       Spain has a level of spending on family policies that is a long way behind the European average and is less than half of the spending allocated by countries with lower child poverty risk rates.
  • 5
       Child benefits based on low incomes are very effective for reducing child poverty, providing that the amount is high, and that the income threshold is medium-high.
  • 6
       Both an improvement in the low-income-based benefit policy with a sum of at least 100 euros per month, and the introduction of a universal policy of a similar amount, would be effective for reducing the number of poor minors as well as the intensity of their poverty. Improvements in the income-based benefit would be more efficient in comparison with the cost and efficacy of a universal policy of a similar amount, because they would represent a lower budgetary cost.

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This report is part of the collection

Reports on the Redistributive Economy

made up of the following publications:

The redistributive effects of the system of taxes and transfers in Europe

The redistributive effects of social benefits and taxes: a review of the current situation

The redistributive effects of wealth tax

The redistributive effects of special taxes

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