Assessing the impact of social transfer income packages on child poverty in European countries

Working Paper 2016-410

Abstract

Children are generally at a higher risk of poverty than the population as a whole, although the mechanisms that lead to their socioeconomic vulnerability vary widely across European countries. This paper assesses to what extent social transfers explain the variation in levels of child poverty across 30 European countries. Using a multilevel framework, we jointly examine individual characteristics and country-level factors, focusing on specific aspects of social transfer systems, namely generosity and targeting. We consider two types of targeting: pro-child (categorical selectivity) and pro-poor (income selectivity).We observe that the variation in child poverty is mainly due to contextual factors and to a lesser degree to individual factors. We conclude that, as stated in the literature, the generosity of social transfers matters in reducing child poverty. Nevertheless, our findings go further and demonstrate that targeting children is more effective in reducing the risk of poverty for children than targeting the lower end of income distribution, which should be borne in mind when determining and prioritizing policy orientations and measures for fighting child poverty.

Authors: Elena Bárcena-Martín, M. Carmen Blanco-Arana, Salvador Pérez-Moreno.