Income inequality and child benefits in Russia: A microsimulation analysis

Child benefits can not only reduce the risk of child poverty but also help decrease overall income inequality. Using microsimulation analysis, the paper assesses the impact of child benefits on disposable income inequality in Russia. The empirical basis of the study is nationally representative data from the Survey of Income and Participation in Social Programs conducted by Rosstat (the Federal State Statistics Service). The Gini coefficient and the decile ratio are used as indicators of inequality. The results show that between 2013 and 2019 child benefits only slightly reduced inequality in disposable incomes. In 2020—2023, the contribution of child benefits to the reduction of income inequality increased substantially, largely due to the federal child benefit reform implemented over this period. The paper also conducts scenario simulations of alternative child benefits designs — universal, means-tested, and quasi-universal — and compares their contribution to inequality reduction under different funding levels. The simulations indicate that, for an equal budget, inequality indicators are more responsive to means‑tested benefits targeted on low-income households. Under sufficiently high funding, promising directions for the development of means-tested benefits include expanding coverage by relaxing the eligibility criteria and providing additional support to younger children. The findings suggest that child benefits should be viewed not only as a tool to alleviate child poverty but also as an important instrument of income inequality reduction policy in Russia.