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Money or Kindergarten? Distributive Effects of Cash Versus In-Kind Family Transfers for Young Children

Author

Listed:
  • Michael Förster

    (OECD)

  • Gerlinde Verbist

    (University of Antwerp)

Abstract

Public support to families with pre-school children can be in the form of cash benefits (e.g. child allowances) or of “in-kind” support (e.g. care services such as kindergartens). The mix of these support measures varies greatly across OECD countries, from a cash / in-kind composition of 10%/90% to 80%/20%. This paper imputes the value of services into an “extended” household income and compares the resulting distributive patterns and the redistributive effect of these two strands of family policies. On average, cash and in-kind transfers each constitute 7 – 8% of the incomes of families with young children. Both instruments are redistributive. Cash transfers reduce child poverty by one third, with the estimated impacts in Austria, Ireland, Sweden, Hungary and Finland performing above average. When services are accounted for, child poverty falls by one quarter and poverty among children enrolled in childcare is more than halved. This reduction is highest in Belgium, France, Hungary, Iceland and Sweden. L’aide publique aux familles ayant des enfants en âge préscolaire peut prendre la forme de prestations monétaires (allocations familiales, par exemple) ou en «nature» (par exemple les services de garde tels que les jardins d'enfants). La combinaison de ces mesures de soutien varie considérablement selon les pays de l'OCDE, d’une composition monétaire / ou en « nature » allant de 10%/90% à 80%/20%. Ce document attribue la valeur des services à un revenu « élargi » des ménages et compare les facteurs distributifs résultant et l’effet redistributif de ces deux volets de la politique familiale. En moyenne, les transferts monétaires et en nature constituent chacun 7- 8% des revenus des familles ayant des enfants en bas âge. Les deux instruments sont redistributifs. Les transferts monétaires réduisent la pauvreté infantile d'un tiers, et les effets estimés sont en-dessus de la moyenne en Autriche, Irlande, Suède, Hongrie et en Finlande. Lorsque les services sont pris en compte, la pauvreté infantile chute d'un quart et la pauvreté chez les enfants inscrits dans les services de garde est divisée par deux. Cette réduction est la plus élevée en Belgique, en France, en Hongrie, en Islande et en Suède.

Suggested Citation

  • Michael 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.
  • Handle: RePEc:oec:elsaab:135-en
    DOI: 10.1787/5k92vxbgpmnt-en
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    References listed on IDEAS

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    1. Aaberge, Rolf & Bhuller, Manudeep & Langørgen, Audun & Mogstad, Magne, 2010. "The distributional impact of public services when needs differ," Journal of Public Economics, Elsevier, vol. 94(9-10), pages 549-562, October.
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    Cited by:

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    2. Rense Nieuwenhuis & Teresa Munzi & Jörg Neugschwender & Heba Omar & Flaviana Palmisano, 2019. "Gender Equality and Poverty are Intrinsically Linked," LIS Working papers 759, LIS Cross-National Data Center in Luxembourg.

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    Keywords

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    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • H40 - Public Economics - - Publicly Provided Goods - - - General
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth

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