What policy functions are reflected in the distribution of financial support for parents by child age and birth order? An analysis of 28 European countries

Abstract

Motivated by the growing prominence of fertility incentivisation and long‐term child development in European family policymaking, this paper examines the distribution of financial support for parents over the course of childhood and between birth orders in Europe. We use the term ‘older‐oriented age bias’ to refer to support that is more generous for older children and the term ‘younger‐oriented age bias’ for more generous support for younger children. Similarly, we refer to distribution patterns tilted towards later birth orders as ‘later‐oriented parity bias’ and to those that favour earlier birth orders as ‘earlier‐oriented parity bias’. Based on a list of four classical policy functions of financial support for parents (child cost compensation, fertility incentivisation, child poverty reduction, and child development), we formulate six (sets of) hypotheses for the age and parity distribution of financial support for parents. To assess these distribution patterns, we examine monthly financial support (allowance‐ and tax‐based) for the first four birth orders at child ages 2, 9, and 17 in low‐income and middle‐income households across 28 European countries as of January 2021. We find that European welfare states typically provide more generous support for younger children, while the support distribution in terms of birth orders depends on pre‐support household income. We also find considerable cross‐country heterogeneity, with fertility incentivisation and (especially) child development being reflected by more countries than child cost compensation and poverty reduction. Our analysis sheds light on previously underexplored trends and implications in the design of financial support for parents in Europe.