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Alternative tax-benefit strategies to support children in Poland

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  • Levy, Horacio
  • Morawski, Leszek
  • Myck, Michal

Abstract

Eurostat data shows that children and elderly are especially at risk of being in poverty. In 2004 the average rates of poverty risk in the European Union for these groups were about 19%. In Poland, the rate was 29% for children and only 7% for the elderly. We examine the role of the tax-benefit system in explaining this situation and analyse how much child poverty figures could change under several reform scenarios. In 2005, families with children were mainly supported by a means-tested family allowance and some supplements. This was extended in 2007 with the introduction of a non-refundable child tax credit. Making use of the European tax-benefit microsimulation model EUROMOD, this paper assesses the consequences of the recent reform in Poland. We examine theoutcome in comparison to child policies in three other European systems and show that poverty reduction would have been more pronounced, if child policies were changed along the lines of the system in France or the United Kingdom. The Austrian system - relying primarily on universal benefits - would bring about a similar reduction in the poverty rate but with much greater reduction in the poverty gap. The paper presents detailed distributional analysis under the different systems assuming the cost of “importing†each of them to be the same as that of introducing the 2007 reform.

Suggested Citation

  • 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.
  • Handle: RePEc:ese:emodwp:em3-08
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    File URL: https://www.iser.essex.ac.uk/research/publications/working-papers/euromod/em3-08.pdf
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    References listed on IDEAS

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    1. Sutherland, Holly, 2001. "EUROMOD: an integrated European benefit-tax model: final report," EUROMOD Working Papers EM9/01, EUROMOD at the Institute for Social and Economic Research.
    2. Beckerman, W, 1979. "The Impact of Income Maintenance Payments on Poverty in Britain, 1975," Economic Journal, Royal Economic Society, vol. 89(354), pages 261-279, June.
    3. Immervoll, Herwig & O'Donoghue, Cathal, 2001. "Towards a multi purpose framework for tax benefit microsimulation," EUROMOD Working Papers EM2/01, EUROMOD at the Institute for Social and Economic Research.
    4. Foster, James & Greer, Joel & Thorbecke, Erik, 1984. "A Class of Decomposable Poverty Measures," Econometrica, Econometric Society, vol. 52(3), pages 761-766, May.
    5. Matsaganis, Manos & O'Donoghue, Cathal & Levy, Horacio & Coromaldi, Manuela & Mercader-Prats, M. & Rodrigues, Carlos Farinha & Toso, Stefano & Tsakloglou, Panos, 2004. "Child poverty and family transfers in Southern Europe," EUROMOD Working Papers EM2/04, EUROMOD at the Institute for Social and Economic Research.
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    Citations

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    Cited by:

    1. Nicholas-James Clavet & Luca Tiberti & Marko Vladisavljevic & Jelena Zarkovic Rakic & Aleksandra Anic & Gorana Krstic & Sasa Randelovic, 2017. "Reduction of child poverty in Serbia: Improved cash-transfers or higher work incentives for parents?," Working Papers PMMA 2017-04, PEP-PMMA.
    2. Kurowska, Anna & Myck, Michal & Wrohlich, Katharina, 2012. "Family and Labor Market Choices: Requirements to Guide Effective Evidence-Based Policy," IZA Discussion Papers 6846, Institute for the Study of Labor (IZA).
    3. 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.
    4. Silvia Avram & Eva Militaru, 2016. "Interactions Between Policy Effects, Population Characteristics and the Tax-Benefit System: An Illustration Using Child Poverty and Child Related Policies in Romania and the Czech Republic," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 128(3), pages 1365-1385, September.
    5. repec:diw:diwwpp:dp1315 is not listed on IDEAS
    6. Michael F. Förster & Gerlinde Verbist, 2012. "Money or Kindergarten? Distributive Effects of Cash Versus In-Kind Family Transfers for Young Children," OECD Social, Employment and Migration Working Papers 135, OECD Publishing.
    7. Tim Goedemé & Karel Van den Bosch & Lina Salanauskaite & Gerlinde Verbist, 2013. "Testing the Statistical Significance of Microsimulation Results: Often Easier than You Think. A Technical Note," ImPRovE Working Papers 13/10, Herman Deleeck Centre for Social Policy, University of Antwerp.
    8. Lietz, Christine & Mantovani, Daniela, 2006. "Lessons from building and using EUROMOD," EUROMOD Working Papers EM5/06, EUROMOD at the Institute for Social and Economic Research.

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