The impact of "Family 500+" programme on household incomes, poverty and inequality

Abstract

We use the microsimulation approach and household budget survey data from 2015 to estimate the short-term impact of the “Family 500+” programme on household incomes, poverty and inequality. The results suggest that the programme will have the strongest impact on the incomes of households at the lower end of income distribution. Extreme consumption poverty in the whole population is reduced in the range from 35 to 37%, while child poverty in the range from 75 to 100%, depending on the choice of equivalence scale and assumptions about changes in household expenditures. The paper shows also that the programme will reduce the Gini index of income inequality in Poland by a few percentage points. The programme can lead to a lower risk of extreme poverty for households with children as compared to small households (e.g. single-person households). Analysis based on certain equivalence scales suggests that even before the implementation of the “Family 500+” programme extreme poverty among households with children was comparable or lower than among one-person or childless households. The progressive impact of “Family 500+” programme on income distribution in Poland may be reduced in the longer run if labour market activity of low income households will be affected negatively.

Do Children Matter to the Household Debt Burden?

“…One of the explanations of impact of children on the objective over-indebtedness observed in this study may be the introduction of government programme "Rodzina 500 + " in 2016 (childcare benefit of 500 PLN paid per month for every child, irrespective of family income) which significantly improved the financial situation of households (Brzeziński & Najsztub, 2017;Jędrzejczak & Pekasiewicz, 2020). Similarly, Kempson et al (2004), while investigating the situation of British households, pointed to the increase in state child benefits and tax credits as a possible explanation for the lack of impact of having children on debt performance.…”

The Political Economy of Populism

“…Most importantly, in 2016 PiS launched its Family 500+ redistribution program, which gives parents 500 zloty (about 150 euros) per month per child, tax-free. This program has proved to be both popular and effective in reducing poverty (Goraus and Inchauste, 2016;Brzezinski and Najsztub, 2017), especially in rural areas where the purchasing power of 500 zloty is much higher than in Warsaw. 50 Furthermore, this redistribution program has undermined neither fiscal health nor growth.…”

When populists deliver on their promises: the electoral effects of a large cash transfer programme in Poland

“…Absolute and relative child poverty have fallen in Poland between 2015 and 2019 from 9.0% to 4.5%, and from 20.6% to 16.2%, respectively (Statistics Poland 2020). The child benefit certainly contributed significantly to these reductions in child poverty (Brzeziński and Najsztub 2017; Gromadzki 2023). In the years immediately after its introduction, the child benefit programme had some negative effects on maternal labour supply (Magda et al .…”