Child benefits ‘help tackle in-work poverty’

Child benefits have made an important contribution to tackling child poverty among working families in Europe, according to a new study funded by the European Commission. The study looks at the role of child benefit 'packages' – cash and tax benefits – in lifting working families out of poverty over the period 1992–2009.

Key findings

  • Child benefit packages as a whole have played an important role in narrowing the gap between working families' net income and the poverty line (60 per cent of median equivalised disposable income). Nevertheless, in many countries they have failed to protect low-wage earners against poverty. In all countries the incomes of single-earner couples on minimum wages are below the poverty line.
  • The child benefit package for lone parents is more generous than for other groups in most countries: but how and whether childcare costs are subsidised makes a big difference to this group.
  • Comparatively generous packages for low-paid workers are found in countries where help is well targeted via income-related cash benefits or tax credits, or social assistance top-ups (including in the UK). But selective benefit systems may be quite ineffective in alleviating poverty due to take-up problems and labour market disincentives.
  • Child benefit packages are also often above average in countries that combine universal cash benefits with income-related cash benefits, housing allowances, or supplementary social assistance benefits.
  • Whereas during the 1990s child benefit packages were able to escape welfare erosion, over the most recent decade the value of the package relative to median income has fallen in more countries than it has increased.

Source: Natascha Van Mechelen and Jonathan Bradshaw, Child Poverty as a Government Priority: Child Benefit Packages for Working Families, 1992–2009, Discussion Paper 50, GINI Project (European Commission)
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