Child Poverty and Family Transfers in the Czech Republic, Hungary and Poland

Abstract

Governments of the Czech Republic, Hungary and Poland implemented reforms of family benefits in the mid-1990s. What were the common features of those reforms and what were the possible effects on child poverty? Based on household micro data, trends in poverty among children, large families and single parents are presented for two data points: one before and one after the restrictive reforms in family policies. The focus of the analysis is on changes in the effectiveness of benefits on child poverty reduction. Child poverty increased during the observed period in all three countries, despite the efforts of governments to smooth the harmful effects of the economic downturn. Large differences in poverty levels and patterns between the three countries persisted. A relative worsening of the income position of children was accompanied by an increased level of targeting, reflected in general attempts to exclude higher-income groups from the benefit regimes. The results in the paper suggest that social transfers in general, and family benefits in particular, contributed to reduce significantly child poverty in the Czech Republic, Hungary and Poland. However, reduction rates decreased between the early and the later 1990s. Current and future reform considerations should therefore include the objective to reverse this trend.