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Financial support for families with children and its trade-offs: balancing redistribution and parental work incentives

Author

Listed:
  • Michal Myck

    () (CenEA and DIW-Berlin)

  • Anna Kurowska

    () (Institute of Social Policy at the University of Warsaw)

  • Michal Kundera

    () (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.

Suggested Citation

  • Michal Myck & Anna Kurowska & Michal Kundera, 2013. "Financial support for families with children and its trade-offs: balancing redistribution and parental work incentives," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 13(2), pages 59-83, December.
  • Handle: RePEc:bic:journl:v:13:y:2013:i:2:p:59-83
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    References listed on IDEAS

    as
    1. Michal Myck & Adrian Domitrz & Leszek Morawski & Aneta Semeniuk, 2015. "Financial incentives to work in the context of a complex reform package and growing wages: the Polish experience 2005–2011," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 15(2), pages 99-121.
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    Cited by:

    1. Michal Myck & Mateusz Najsztub, 2015. "Data and Model Cross-validation to Improve Accuracy of Microsimulation Results: Estimates for the Polish Household Budget Survey," International Journal of Microsimulation, International Microsimulation Association, vol. 8(1), pages 33-66.

    More about this item

    Keywords

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

    JEL classification:

    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy

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