Inequality, poverty, and child benefits: evidence from a natural experiment

In this article, we empirically address the link between policy, and inequality and child poverty. Our analysis fills a gap in policy assessment research by examining the effect of introducing a cash universal child benefit (the program Family 500+ in 2016 in Poland) on income inequality and poverty, specifically child poverty. The analysis utilizes micro-level household data from the Luxembourg Income Study (LIS) and Statistics Poland. We examine the changes in various indicators of inequality and poverty and their decomposition. All conducted distributional analyses suggest that a decrease in income inequality and poverty reduction is attributable to the program Family 500 + . We assess relative and subjective poverty and show that both are influenced by the program. The causal relationship between the benefit and the decline in child relative and subjective poverty is confirmed by difference-in-differences estimation, in which treated and non-treated households are compared before and after the program’s introduction.