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Financial Support for Families with Children and its Trade-offs: Balancing Redistribution and Parental Work Incentives

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Author Info

  • Myck, Michal

    ()
    (Centre for Economic Analysis, CenEA)

  • Kurowska, Anna

    ()
    (Warsaw University)

  • Kundera, Michał

    ()
    (Centre for Economic Analysis, CenEA)

Abstract

Financial support for families with children implies inherent trade-offs some of which are less obvious than others. In the end these trade-offs determine the effectiveness of policy with respect to the material situation of families and employment of their parents. We analyse several kinds of trade-offs involved using a careful selection of potential changes to the system of financial support for families with children. We focus on: 1) the trade-off between redistribution of income to poorer households and improving work incentives, 2) the trade-off between improving work incentives for first and for second earners in couples, 3) the trade-off between improving work incentives for those facing strong and weak incentives in the baseline system. The exercise is conducted on data from Poland, a country characterized by high levels of child poverty, low female employment and one of the lowest fertility rates in Europe. We demonstrate the complexity of potential consequences of family support policy and stress the need for well-defined policy goals and careful analysis ahead of any reform.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 7506.

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Length: 36 pages
Date of creation: Jul 2013
Date of revision:
Publication status: published in: Baltic Journal of Economics, 2013, 13 (2)
Handle: RePEc:iza:izadps:dp7506

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Keywords: tax and benefit reforms; labour supply; microsimulation; family policy;

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References

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  1. Haan, Peter & Wrohlich, Katharina, 2011. "Can child care policy encourage employment and fertility?: Evidence from a structural model," Labour Economics, Elsevier, Elsevier, vol. 18(4), pages 498-512, August.
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  3. Immervoll, Herwig & Kleven, Henrik Jacobsen & Kreiner, Claus Thustrup & Saez, Emmanuel, 2005. "Welfare Reform in European Countries: A Microsimulation Analysis," IZA Discussion Papers 1810, Institute for the Study of Labor (IZA).
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  7. Tom Clark & Andrew Dilnot & Alissa Goodman & Michal Myck, 2002. "Taxes and Transfers 1997--2001," Oxford Review of Economic Policy, Oxford University Press, Oxford University Press, vol. 18(2), pages 187-201, June.
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  11. Bargain, Olivier & Morawski, Leszek & Myck, Michal & Socha, Mieczyslaw, 2007. "As SIMPL As That: Introducing a Tax-Benefit Microsimulation Model for Poland," IZA Discussion Papers 2988, Institute for the Study of Labor (IZA).
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  20. Anna Matysiak & Daniele Vignoli, 2006. "Fertility and women’s employment: a meta-analysis," MPIDR Working Papers WP-2006-048, Max Planck Institute for Demographic Research, Rostock, Germany.
  21. Anne Gauthier, 2007. "The impact of family policies on fertility in industrialized countries: a review of the literature," Population Research and Policy Review, Springer, Springer, vol. 26(3), pages 323-346, June.
  22. Levy, Horacio & Morawski, Leszek & Myck, Michal, 2008. "Alternative tax-benefit strategies to support children in Poland," EUROMOD Working Papers EM3/08, EUROMOD at the Institute for Social and Economic Research.
  23. Duncan, Alan & Giles, Christopher, 1996. "Labour Supply Incentives and Recent Family Credit Reforms," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 106(434), pages 142-55, January.
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Cited by:
  1. Michal Myck & Mateusz Najsztub, 2014. "Data and Model Cross-Validation to Improve Accuracy of Microsimulation Results: Estimates for the Polish Household Budget Survey," Discussion Papers of DIW Berlin 1368, DIW Berlin, German Institute for Economic Research.

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