Child Poverty in Sweden and the United States: The Effect of Social Transfers and Parental Labor Force Participation

Abstract

The authors compare the incidence and some of the causes of child poverty in Sweden and the United States in selected years using data from the Luxembourg Income Study. The U.S. sample is restricted to white non-hispanic children to present the most favorable comparison with Sweden's more homogeneous population. When parents' labor force participation and demographic characteristics are taken into account, the proportion of children in families whose income prior to social transfers and taxes was below the poverty line (defined as 40% of median disposable income adjusted for family size) is very similar in the two countries. Because all poor children in Sweden received transfers and many in the United States did not, however, and because transfers were more generous in Sweden, a much lower percentage of children in Sweden than in the United States were poor after social transfers and taxes, regardless of parents' work effort or other characteristics.