Nothing Special   »   [go: up one dir, main page]
IDEAS home Printed from https://ideas.repec.org/p/ese/emodwp/em13-18.html
   My bibliography  Save this paper

To what extent do welfare states compensate for the cost of children? A hypothetical household approach to policy evaluations

Author

Listed:
  • Penne, Tess
  • Storms, Bérénice
  • Hufkens, Tine
  • Goedemé, Tim
Abstract
In order to alleviate child poverty, contemporary European welfare states have shifted their focus increasingly towards child-centred investment strategies. However, studies assessing the generosity of welfare states to families with children focus mainly on the role of cash benefit packages, or on government expenditure, disregarding the actual costs families face when accessing essential goods and services. This paper takes a hypothetical household approach to family policy evaluations and aims at contributing to existing studies by: (1) empirically assessing the needs and costs of children across welfare states by making use of cross-nationally comparable reference budgets, while taking into account publicly-provided or subsidized services, (2) simulating the cash benefits that households with children receive through the tax-benefit system, by making use of the new Hypothetical Household Tool (HHoT) in EUROMOD, and, (3) combining both types of information in order to compare the essential out-of-pocket costs of children between 6 and 18 years old with the simulated cash benefit packages. The paper focuses on six European welfare states: Belgium, Finland, Greece, Hungary, Italy and Spain. We propose a new indicator that can be used to assess welfare state generosity to families with children: the child cost compensation indicator. By making use of this indicator, we show that, even though with important cross-national variation, the out-of-pocket cost of children is generally compensated to a small extent through cash policies. Although support for families is higher at the lower end of the income distribution, for households living on a low gross wage, the income of a family with children is less adequate compared to a similar childless family, and is in many cases insufficient to participate adequately in society.

Suggested Citation

  • Penne, Tess & Storms, Bérénice & Hufkens, Tine & Goedemé, Tim, 2018. "To what extent do welfare states compensate for the cost of children? A hypothetical household approach to policy evaluations," EUROMOD Working Papers EM13/18, EUROMOD at the Institute for Social and Economic Research.
    • Handle: RePEc:ese:emodwp:em13-18
    as

    Download full text from publisher

    File URL: https://www.iser.essex.ac.uk/wp-content/uploads/files/working-papers/euromod/em13-18.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Herwig Immervoll & David Barber, 2005. "Can Parents Afford to Work?: Childcare Costs, Tax-Benefit Policies and Work Incentives," OECD Social, Employment and Migration Working Papers 31, OECD Publishing.
    2. Aaberge, Rolf & Langørgen, Audun & Mogstad, Magne & Østensen, Marit, 2008. "The Impact of Local Public Services and Geographical Cost of Living Differences on Poverty Estimates," IZA Discussion Papers 3686, Institute of Labor Economics (IZA).
    3. Tess Penne & Irene Cussó Parcerisas & Lauri Mäkinen & Bérénice Storms & Tim Goedemé, 2016. "Can reference budgets be used as a poverty line?," ImPRovE Working Papers 16/05, Herman Deleeck Centre for Social Policy, University of Antwerp.
    4. Douglas A. Wolf & Ronald D. Lee & Timothy Miller & Gretchen Donehower & Alexandre Genest, 2011. "Fiscal Externalities of Becoming a Parent," Population and Development Review, The Population Council, Inc., vol. 37(2), pages 241-266, June.
    5. Wim Van Lancker & Natascha Van Mechelen, 2014. "Universalism under siege? Exploring the association between targeting, child benefits and child poverty across 26 countries," Working Papers 1401, Herman Deleeck Centre for Social Policy, University of Antwerp.
    6. repec:bla:econom:v:59:y:1992:i:233:p:1-16 is not listed on IDEAS
    7. Olivier Thévenon, 2011. "Family Policies in OECD Countries: A Comparative Analysis," Population and Development Review, The Population Council, Inc., vol. 37(1), pages 57-87, March.
    8. Timothy Smeeding & Gunther Schmaus & Brigitte Buhmann & Lee Rainwater, 1988. "Equivalence Scales, Well-Being, Inequality and Poverty: Sensitivity Estimates Across Ten Countries Using the LIS Database," LIS Working papers 17, LIS Cross-National Data Center in Luxembourg.
    9. Tsakloglou, Panos, 1991. "Estimation and Comparison of Two Simple Models of Equivalence Scales for the Cost of Children," Economic Journal, Royal Economic Society, vol. 101(405), pages 343-357, March.
    10. Danièle Meulders & Jérôme De Henau & Sile Padraigin O'Dorchai, 2006. "The childcare triad? indicators assessing three fields of child policies towards working mothers in the EU-15," ULB Institutional Repository 2013/7724, ULB -- Universite Libre de Bruxelles.
    11. Wen-Hao Chen & Miles Corak, 2008. "Child poverty and changes in child poverty," Demography, Springer;Population Association of America (PAA), vol. 45(3), pages 537-553, August.
    12. Miles Corak & Christine Lietz & Holly Sutherland, 2005. "The Impact of Tax and Transfer Systems on Children in the European Union," Papers inwopa05/30, Innocenti Working Papers.
    13. Alari Paulus & Holly Sutherland & Panos Tsakloglou, 2010. "The distributional impact of in-kind public benefits in European countries," Journal of Policy Analysis and Management, John Wiley & Sons, Ltd., vol. 29(2), pages 243-266.
    14. 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.
    15. Marie-Thérèse Letablier & Angela Luci & Antoine Math & Olivier Thévenon, 2009. "The costs of raising children and the effectiveness of policies to support parenthood in European countries: a Literature Review," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00408899, HAL.
    16. Matthew Gray & David Stanton, 2010. "Costs of children and Equivalence Scales: A Review of Methodological Issues and Australian Estimates," Australian Journal of Labour Economics (AJLE), Bankwest Curtin Economics Centre (BCEC), Curtin Business School, vol. 13(1), pages 99-115.
    17. Miles Corak, 2006. "Do Poor Children Become Poor Adults? Lessons from a Cross-Country Comparison of Generational Earnings Mobility," Research on Economic Inequality, in: Dynamics of Inequality and Poverty, pages 143-188, Emerald Group Publishing Limited.
    18. Justin Ven & Nicolas Hérault & Francisco Azpitarte, 2017. "Identifying tax implicit equivalence scales," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 15(3), pages 257-275, September.
    19. Deaton, Angus S & Muellbauer, John, 1986. "On Measuring Child Costs: With Applications to Poor Countries," Journal of Political Economy, University of Chicago Press, vol. 94(4), pages 720-744, August.
    20. Virginia Hernanz & Franck Malherbet & Michele Pellizzari, 2004. "Take-Up of Welfare Benefits in OECD Countries: A Review of the Evidence," OECD Social, Employment and Migration Working Papers 17, OECD Publishing.
    21. Woessmann, Ludger, 2004. "How Equal Are Educational Opportunities? Family Background and Student Achievement in Europe and the United States," IZA Discussion Papers 1284, Institute of Labor Economics (IZA).
    22. Browning, Martin, 1992. "Children and Household Economic Behavior," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1434-1475, September.
    23. Koulovatianos, Christos & Schrder, Carsten & Schmidt, Ulrich, 2009. "Nonmarket Household Time and the Cost of Children," Journal of Business & Economic Statistics, American Statistical Association, vol. 27, pages 42-51.
    24. Bradbury, Bruce, 1994. "Measuring the Cost of Children," Australian Economic Papers, Wiley Blackwell, vol. 33(62), pages 120-138, June.
    25. Holly Sutherland & Francesco Figari, 2013. "EUROMOD: the European Union tax-benefit microsimulation model," International Journal of Microsimulation, International Microsimulation Association, vol. 1(6), pages 4-26.
    26. Pollak, Robert A & Wales, Terence J, 1979. "Welfare Comparisons and Equivalence Scales," American Economic Review, American Economic Association, vol. 69(2), pages 216-221, May.
    27. Tsakloglou, Panos & O'Donoghue, Cathal & Matsaganis, Manos & Levy, Horacio & Coromaldi, Manuela & Farinha Rodrigues, Carlos & Toso, Stefano & Mercader-Prats, M., 2004. "Child poverty and family transfers in Southern Europe," EUROMOD Working Papers EM2/04, EUROMOD at the Institute for Social and Economic Research.
    28. Gosta Esping-Andersen, 2008. "Childhood investments and skill formation," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 15(1), pages 19-44, February.
    29. Maria KARAMESSINI, 2008. "Continuity and change in the southern European social model," International Labour Review, International Labour Organization, vol. 147(1), pages 43-70, March.
    30. Wim Van Lancker, 2013. "Putting the child-centred investment strategy to the test: Evidence for the EU27," Working Papers 1301, Herman Deleeck Centre for Social Policy, University of Antwerp.
    31. Bruce Bradbury, 2008. "Time And The Cost Of Children," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 54(3), pages 305-323, September.
    32. David Brady & Rebekah Burroway, 2012. "Targeting, Universalism, and Single-Mother Poverty: A Multilevel Analysis Across 18 Affluent Democracies," Demography, Springer;Population Association of America (PAA), vol. 49(2), pages 719-746, May.
    33. Sutherland, Holly & Immervoll, Herwig & de Vos, Klaas, 2000. "Child poverty and child benefits in the European Union," EUROMOD Working Papers EM1/00, EUROMOD at the Institute for Social and Economic Research.
    34. Adema, Willem, 2012. "Setting the scene: The mix of family policy objectives and packages across the OECD," Children and Youth Services Review, Elsevier, vol. 34(3), pages 487-498.
    35. Andrea Brandolini, 2006. "Measurement of Income Distribution in Supranational Entities: The Case of the European Union," LIS Working papers 452, LIS Cross-National Data Center in Luxembourg.
    36. Brigitte Buhmann & Lee Rainwater & Guenther Schmaus & Timothy M. Smeeding, 1988. "Equivalence Scales, Well‐Being, Inequality, And Poverty: Sensitivity Estimates Across Ten Countries Using The Luxembourg Income Study (Lis) Database," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 34(2), pages 115-142, June.
    37. repec:bla:revinw:v:34:y:1988:i:2:p:115-42 is not listed on IDEAS
    38. Bargain, Olivier & Donni, Olivier, 2012. "Expenditure on children: A Rothbarth-type method consistent with scale economies and parents' bargaining," European Economic Review, Elsevier, vol. 56(4), pages 792-813.
    39. Peter Whiteford & Willem Adema, 2007. "What Works Best in Reducing Child Poverty: A Benefit or Work Strategy?," OECD Social, Employment and Migration Working Papers 51, OECD Publishing.
    40. Marie-Thérèse Letablier & Angela Luci & Antoine Math & Olivier Thévenon, 2009. "The costs of raising children and the effectiveness of policies to support parenthood in European countries: a Literature Review," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00408899, HAL.
    41. Nelson, Julie A, 1993. "Household Equivalence Scales: Theory versus Policy?," Journal of Labor Economics, University of Chicago Press, vol. 11(3), pages 471-493, July.
    42. Gerlinde Verbist & Wim Van Lancker, 2016. "Horizontal and Vertical Equity Objectives of Child Benefit Systems: An Empirical Assessment for European Countries," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 128(3), pages 1299-1318, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Tess Penne & Ilse Cornelis & Bérénice Storms, 2020. "All we need is…," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 147(3), pages 991-1013, February.
    2. Maria Alessandra Antonelli & Valeria De Bonis, 2021. "Economic Poverty: Does the Break-Up of Families Matter?," Social Sciences, MDPI, vol. 10(6), pages 1-20, June.
    3. Gough, Ian, 2021. "Two scenarios for sustainable welfare: new ideas for an eco-social contract," LSE Research Online Documents on Economics 112594, London School of Economics and Political Science, LSE Library.
    4. Iryna Kyzyma, 2020. "How Poor Are the Poor? Looking beyond the Binary Measure of Income Poverty," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 18(4), pages 525-549, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Gerlinde Verbist & Wim Van Lancker, 2016. "Horizontal and Vertical Equity Objectives of Child Benefit Systems: An Empirical Assessment for European Countries," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 128(3), pages 1299-1318, September.
    2. Tess Penne & Irene Cussó Parcerisas & Lauri Mäkinen & Bérénice Storms & Tim Goedemé, 2016. "Can reference budgets be used as a poverty line?," ImPRovE Working Papers 16/05, Herman Deleeck Centre for Social Policy, University of Antwerp.
    3. Ivica Urban & Martina Pezer, 2020. "Compensation for Households with Children in Croatia, Slovenia and Austria," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 147(1), pages 203-235, January.
    4. Bruce Bradbury, 2003. "The welfare interpretation of consumer equivalence scales," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 30(7), pages 770-787, July.
    5. Olivier Thévenon & Angela Luci, 2012. "Reconciling Work, Family and Child Outcomes: What Implications for Family Support Policies?," Population Research and Policy Review, Springer;Southern Demographic Association (SDA), vol. 31(6), pages 855-882, December.
    6. BARGAIN Olivier & DONNI Olivier, 2010. "The Measurement of Child Costs: A Rothbarth-Type Method Consistent with Scale Economies and Parents’ Bargaining," LISER Working Paper Series 2010-30, Luxembourg Institute of Socio-Economic Research (LISER).
    7. Sunil Kumar & Renuka Mahadevan, 2008. "Construction of An Adult Equivalence Index to Measure Intra-household Inequality and Poverty: Case Study," Discussion Papers Series 363, School of Economics, University of Queensland, Australia.
    8. Nancy Folbre & Marta Murray-Close & Jooyeoun Suh, 2018. "Equivalence scales for extended income in the U.S," Review of Economics of the Household, Springer, vol. 16(2), pages 189-227, June.
    9. Anderson VIL, 2023. "Children Costs in a One-Headed Household: Empirical Evidence from the UK," THEMA Working Papers 2022-21, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    10. Marx, Ive & Nolan, Brian & Olivera, Javier, 2014. "The Welfare State and Anti-Poverty Policy in Rich Countries," IZA Discussion Papers 8154, Institute of Labor Economics (IZA).
    11. Levy, Horacio & Lietz, Christine & Sutherland, Holly, 2006. "Alternative Tax-Benefit Strategies to Support Children in the European Union. Recent Reforms in Austria, Spain and the UK," Economics Series 185, Institute for Advanced Studies.
    12. Holly Sutherland & Christine Lietz & Horacio Levy, 2005. "Alternative Tax-benefit Strategies to Support Children in the European Union. Recent Reforms in Austria, Spain and the United Kingdom," Papers inwopa05/33, Innocenti Working Papers.
    13. Stefan Kranzinger, 2020. "The decomposition of income inequality in the EU-28," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 47(3), pages 643-668, August.
    14. Melanie Borah, 2020. "Estimating Extended Income Equivalence Scales from Income Satisfaction and Time Use Data," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 149(2), pages 687-718, June.
    15. Ursicino Carrascal Arranz, 1996. "Estimación de escalas de equivalencia de consumo mediante un modelo de demenda casi ideal (AIDS) ampliado," Estudios de Economia Aplicada, Estudios de Economia Aplicada, vol. 6, pages 25-38, Diciembre.
    16. Christos Koutsampelas & Panos Tsakloglou, 2013. "The distribution of full income in Greece," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 40(4), pages 311-330, March.
    17. Bargain, Olivier B. & Donni, Olivier, 2009. "The Measurement of Child Costs: A Rothbarth-Type Method Consistent with Scale Economies," IZA Discussion Papers 4654, Institute of Labor Economics (IZA).
    18. Melanie Borah & Andreas Knabe & Kevin Pahlke, 2021. "Parental time restrictions and the cost of children: insights from a survey among mothers," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 19(1), pages 73-95, March.
    19. Regan, Mark & Kakoulidou, Theano, 2022. "How important are the unit of analysis and equivalence scales when measuring income poverty and inequality? Evidence from Ireland," Papers WP721, Economic and Social Research Institute (ESRI).
    20. DECANCQ, Koen & FLEURBAEY, Marc & SCHOKKAERT, Erik, 2014. "Inequality, income, and well-being," LIDAM Discussion Papers CORE 2014018, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ese:emodwp:em13-18. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Jonathan Nears (email available below). General contact details of provider: https://edirc.repec.org/data/rcessuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.