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Financial Support for Families with Children and its Trade-offs: Balancing Redistribution and Parental Work Incentives

Author

Listed:
  • Myck, Michal

    (Centre for Economic Analysis, CenEA)

  • Kurowska, Anna

    (Warsaw University)

  • Kundera, Micha?

    (Centre for Economic Analysis, 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

  • Myck, Michal & Kurowska, Anna & Kundera, Micha?, 2013. "Financial Support for Families with Children and its Trade-offs: Balancing Redistribution and Parental Work Incentives," IZA Discussion Papers 7506, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp7506
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    References listed on IDEAS

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    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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    26. Stuart Adam & James Browne, 2010. "Redistribution, work incentives and thirty years of UK tax and benefit reform," IFS Working Papers W10/24, Institute for Fiscal Studies.
    27. Blundell, Richard, 2001. "Welfare Reform for Low Income Workers," Oxford Economic Papers, Oxford University Press, vol. 53(2), pages 189-214, April.
    28. Bargain, Olivier & Morawski, Leszek & Myck, Michal & Socha, Mieczyslaw, 2007. "As SIMPL As That: Introducing a Tax-Benefit Microsimulation Model for Poland," IZA Discussion Papers 2988, Institute of Labor Economics (IZA).
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    Full references (including those not matched with items on IDEAS)

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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.
    2. Jekaterina Navicke & Romas Lazutka, 2016. "Work incentives across the income distribution and for model families in Lithuania: 2005-2013," Baltic Journal of Economics, Baltic International Centre for Economic Policy Studies, vol. 16(2), pages 175-191.
    3. Ranđelović Saša & Žarković Rakić Jelena & Vladisavljević Marko & Vujić Sunčica, 2019. "Labour Supply and Inequality Effects of In-Work Benefits: Evidence from Serbia," Naše gospodarstvo/Our economy, Sciendo, vol. 65(3), pages 1-22, September.
    4. Suzani Mohamad Samuri & Bahbibi Rahmatullah & Norazilawati Abdullah & Aslina Ahmad & Zainiah Mohamed Isa & Hamsa Hammed, 2018. "Early Childhood Research Landscape on Children’s Profile: Coherent Taxonomy, Motivation, Open Challenges, Recommendations and, Pathways for Future Research," Child Indicators Research, Springer;The International Society of Child Indicators (ISCI), vol. 11(5), pages 1603-1630, October.
    5. Brzezinski, Michal & Najsztub, Mateusz, 2021. "The impact of "Family 500+" programme on household incomes, poverty and inequality," SocArXiv vkr6h, Center for Open Science.
    6. Konopczak, Karolina & Skibicki, Jakub, 2012. "Mikrosymulacyjny model podatkowo-zasiłkowy Ministerstwa Finansów – dokumentacja," MF Working Papers 33, Ministry of Finance in Poland.

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    More about this item

    Keywords

    tax and benefit reforms; labour supply; microsimulation; family policy;
    All these keywords.

    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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