Incidence of Poverty among Large Households and the Alleviating Effects of the Guaranteed Minimum Income in Romania

Studies show that large households are a vulnerable category, faced with high rates of relative and severe poverty. The most vulnerable to the risk of poverty and its extreme forms are the households with many children, those that, besides children, have inactive or unemployed members, persons that are employed but gain low incomes, or single parent families with children, and so on. To reduce poverty and its extreme forms, the guaranteed minimum income was established in 2002 as a measure to prevent and alleviate poverty and social exclusion among families and single persons in difficulty. In this paper we analyze the poverty reducing effects of this social benefit for large households. As a contribution to the knowledge development of the area related to poverty and social action, we estimated the guaranteed minimum income impact on relative poverty, calculated at the 60% of median income per equivalent adult, in dynamics, for large households. Methodologically, for highlighting the guaranteed minimum income benefit’s effects, the rates of relative and severe poverty were simulated, including or not including this type of social support in the disposable income of people in the households and, by subtraction, we assessed the guaranteed minimum income contribution to poverty reduction for the large households. Results show that although the guaranteed minimum income has a positive effect, reducing the relative and severe poverty among large households, these households are still facing high poverty, even in the presence of this social support.