Size matters: targeting efficiency and poverty reduction effects of means-tested and universal child benefits in Russia

Concerns about the long-term effects of child poverty on individuals and society have been increasing. Urgent action needs to be taken to combat child poverty, but what is the best strategy likely to be? The relative effectiveness of means-tested versus universal schemes for poverty alleviation strategies has long been debated. Key differences include screening costs, targeting errors, incentive gaps and issues of financial sustainability. This article explores and compares the extent to which the Hong Kong SAR Government’s current means-tested Comprehensive Social Security Assistance (CSSA) scheme and alternative simulated means-tested and universal schemes could alleviate child poverty and income inequality. Core data for the study was taken from cross-sectional household survey data in Hong Kong. The study found that means-tested schemes with flat rates had higher adequacy in terms of the amount of benefits reaching poor households, than those with sliding scales. Targeting schemes had relatively higher exclusion errors compared to schemes with universal benefits. Evidence was found that that universal benefit schemes with flat rates had substantially greater impacts on all child poverty and income inequality indicators compared to the current CSSA and simulated means-tested schemes with flat rate benefits. The study is timely and presents a new and important opportunity to assess the extent to which a simulated policy change from means-tested to universal benefit could more effectively combat child poverty and reduce income inequality as well as achieve financial sustainability. The article concludes that more effective policy initiatives and approaches to child poverty and income inequality could be gained by varying dimensions, including: type of programmes (means-tested versus universal basis); benefit levels; and delivery methods (flat rate versus sliding scales). The projected expenditures of 42 cash transfer benefit schemes and four selected means-tested and universal programmes with the lowest and highest average costs can form the basis for future discussion on policy options to promote social and economic improvement for all groups.

Child Poverty and Health in the United States: Introduction and Executive Summary.

The present paper uses a panel dataset to estimate the marginal returns to different types of government expenditure on agricultural growth and rural poverty reduction in Thailand. The study finds that additional government spending on agricultural research provides the largest return in terms of agricultural productivity and has the second largest impact on rural poverty reduction. Increased investment in rural electrification has the largest poverty reduction impact, mainly through improved nonfarm employment. Rural education has the third largest impact on both productivity and poverty reduction. Irrigation has a positive impact on agricultural productivity, but regional variation is considerable. Government spending on rural roads has no significant impact on agricultural productivity and its poverty reduction impact ranks last among all investment alternatives considered. Additional investment in the Northeast Region has a greater impact on poverty reduction than in other regions.

In what some describe as one of the great natural experiments of our time, the Russian Federation has introduced a series of sweeping economic reforms over a very short period of time, beginning in January 1992. These include the elimination of most food subsidies; the reduction of other food subsidies and subsidies for fuel and most other basic commodities; the use of freely fluctuating market prices; the privatization of selected state enterprises; the creation of conditions for the establishment of a private sector in many areas of economic activity; and the initiation of a process that will ultimately transfer much property and land into private ownership. The result is rapid economic and social change. Western observers agree that this transformation will produce significant dislocations and affect many people adversely. Most expect that the worst dislocations will be in the short term, with the transformation leading to substantial long-term benefits. The Russians involved in the design and implementation of this transition, as well as Russian politicians, have been and continue to be deeply concerned about the impacts of the reforms on poverty levels.

Child poverty remains a significant concern across Europe and citizens regard policy interventions that effectively address this issue to be of utmost importance. In this work, we analyse the potential of social transfer policy alternatives to alleviate child and overall poverty simultaneously in European countries. Using a logistic regression to define the objective functions and constraints, we rely on multiobjective programming to assess key features of national social transfer systems that can minimize child and overall poverty and tend to equal both levels downwards. Taking into account the starting levels of each country, the results underline the importance of finding an adequate combination of pro-child and pro-poor targeting of social transfer policies. For most European countries, an increase in the level of cash benefits for children is advisable – particularly universal benefits – except in Croatia, the Netherlands, and Norway. Nonetheless, in France, Greece, Italy, Ireland, the Netherlands, and Spain, the recommended proportion of GDP allocated to universal cash benefits is lower than the proportion allocated to means-tested benefits. In this regard, our research provides an innovative approach for policymakers to optimize poverty reduction strategies by contributing valuable insights for the design and implementation of effective social transfer policies to combat child and overall poverty in European countries.

Paths out of poverty: International experience

The paper documents child poverty levels and trends using both relative (‘deep’) and absolute (‘extreme’) measures in two clusters: Anglo-Saxon high-income countries and upper middle-income countries. We also investigate the influence of different components of household income and other resources on child deep-poverty rates to examine the role of the market and the redistributive effects that materialize through private transfers, public benefits, and tax systems on generating poverty reduction. Overall, middle-income nations have witnessed continuous reductions in their extreme child poverty rates, while mild decreases or fluctuations have been observed in the five high-income nations, with the US highlighted by its relatively high rates of deep and extreme poverty regardless of absolute or relative measures and type of equivalence scale used. Private institutions play a larger role in poverty reduction in middle-income nations compared to its impact on developed nations. The degree of dependence on universal or assistance benefits varies among high-income nation. In the US, universal programs tend to be meager, while Australian social insurance and universal benefit are robust in their fight against deep poverty. Brazil stands out by its overwhelmingly large proportion of social insurance programs that contribute to improvements of its deep child poverty situation, and South Africa’s assistance benefit system performs better in lifting children out of deep poverty.

This study presents a methodology to predict the child poverty impact of COVID-19 that can be readily applied in other country contexts where similar household data are available—and illustrates this case using data from Turkey. Using Household Budget Survey 2018, the microsimulation model estimates the impact of labour income loss on household expenditures, considering that some types of jobs/sectors may be more vulnerable than others to the COVID-19 shock. Labour income loss is estimated to lead to reductions in monthly household expenditure using an income elasticity model, and expenditure-based child poverty is found to increase in Turkey by 4.9–9.3 percentage points (depending on shock severity) from a base level of 15.4%. Among the hypothetical cash transfer scenarios considered, the universal child grant for 0–17 years old children was found to have the highest child poverty reduction impact overall, while schemes targeting the bottom 20–30% of households are more cost-effective in terms of poverty reduction. The microsimulation model set out in this paper can be readily replicated in countries where similar Household Budget Surveys are available.

The fundamental scientific challenge the ways to the solution of which are presented in this article, is to clarify the mechanisms of poverty alleviation among the population of Russia. One of the important aspects of measuring poverty in post-Soviet Russia is the presence of a persistent bias, which is expressed in the structure of incomes of Russian households where there is a large share of hidden incomes, which are estimated by official statistics at the macro level, but their sources and distribution among households remain poorly understood. Assessing the impact of hidden incomes on poverty alleviation seems to be an urgent problem. The purpose of this work is to explain the changes in the structure of relative poverty of Russian households caused by various components of their disposable resources, including the latent income component. The initial data are presented by the information from the project “The Russia Longitudinal Monitoring Survey – Higher School of Economics” for 2000–2018. Household disposable resources became indicators of well-being. Poor households are those whose per capita disposable resources were less than 50 % of the median. The research methodology is based on approaches to measuring relative poverty, which makes it possible to decompose it through a comprehensive analysis of its level and structure. Poverty decomposition was carried out for the components of household incomes, which make up their total disposable resources, by determining the marginal contribution of each component to the reduction of total poverty.

In many developed countries lone parent families face high rates of child poverty. Among those lone parents who do get child maintenance there is a hidden problem. States may retain all, or a proportion, of the maintenance that is paid in order to offset other fiscal costs. Thus, the potential of child maintenance to alleviate poverty among lone parent families may not be fully realized, especially if the families are also in receipt of social assistance benefits. This paper provides an original comparative analysis exploring the effectiveness of child maintenance to reduce child poverty among lone parent families in receipt of social assistance. It addresses the question of whether effectiveness is compromised once interaction effects (such as the operation of a child maintenance disregard) are taken into account in four countries Australia, Finland, Germany and the UK using the LIS dataset (2013). It raises important policy considerations and provides evidence to show that if policy makers are serious about reducing child poverty, they must understand how hidden mechanisms within interactions between child maintenance and social security systems can work as effective cost recovery tools for the state, but have no poverty reduction impact.

This article analyses programmes of cash allowances for children and compares their effectiveness in combating child poverty in Russia and four European Union (EU) countries representing alternative family policy models – Sweden, Germany, Belgium and the United Kingdom. Using microsimulation models, this article estimates the potential gains if the Russian system were re-designed along the policy parameters of these countries and vice versa. The results confirm that the poverty impact of the programme design is smaller than that of the level of spending. Other conditions being equal, the best distributional outcomes for children are achieved by applying the mix of universal and means-tested child benefits, such as those employed by the United Kingdom and Belgium. At the same time, the Russian design of child allowances does not appear to be less effective in terms of its impact on child poverty when transferred to European countries in place of their current arrangements.

Universal child benefits are an important component of the social protection systems in many developed economies, particularly in Europe. When evaluating their impact, most studies tend to focus primarily on the empirical evidence and short-term effects. However, given their large-scale implementation, such programs can have sizable general equilibrium effects. The aim of this paper is to study the long-run implications of universal child benefits within a theoretical framework that can capture the complexities of household decisions regarding consumption, labor participation, and the timing of children. To this end, I develop an overlapping generations model with idiosyncratic earnings risk, infertility shocks, and endogenous temporal fertility. According to the model simulations, universal child benefits lead to a reduction in the spacing between children and, on average, lower maternal age at childbirth for all births. This, in turn, alleviates some of the negative aggregate effects typically associated with redistributive policies, but has a detrimental impact on the average quality of children. Finally, universal child benefits increase ex-ante welfare by 0.42% of lifetime adult consumption, significantly outperforming broad-based transfer policies not tied to the number of children.

There is scarce evidence regarding redistribution policies implemented by right‐wing populist parties forming majority governments. We contribute to this literature by measuring the effects of sweeping reforms of the tax and benefit system carried out by the populist party PiS governing Poland since 2015. The reforms included a generous, unconditional, and universal child benefit. Using micro‐simulation‐based decompositions of relative poverty, we separate poverty changes due to the populists' policies (policy effects) from observed poverty changes. We found that populists' reforms from 2015 to 2019 had large poverty‐reducing effects: total poverty was brought down by more than 2 percentage points, while child poverty by about 6.5 points. However, the policy effects account ‘only’ for about half of overall poverty declines over this period. On the other hand, they are much bigger than those obtained previously by a coalition of mainstream parties (2007–2011) or a coalition of populist ones (2005–2007). Since 2015, the populists' reforms targeted social groups that were neglected or inadequately addressed by anti‐poverty policies by past governments. Our results suggest that, at least in conservative and ethnically homogeneous societies, right‐wing populist majoritarian governments are capable of carrying out large‐scale redistribution projects that lead to sizeable poverty reductions and include non‐chauvinist, universal cash transfers.

Child poverty occupies a special place in the fight against poverty of national governments and international organizations. Reducing child poverty and eradicating child extreme poverty should be a priority in the social and economic policy of any state. The aim of the study is to analyze child poverty in Russia, the United States and developing countries. Special attention is paid to the analysis of approaches to the study and tracking of child poverty by national systems and international organizations; the special significance of the negative impact of poverty in children on epigenetic, immunological, physiological, psychological types of adaptation at the age of 2-3 years was noted. This requires effective regulation to offset the negative impact of extreme poverty on children. it is substantiated that the policy of state aid to poor families with children in the Russian Federation should not be based on income poverty indicators. The influence of the depression of the Russian economy in 2014 on a sharp increase in the proportion of poor families with three or more children is shown. The special role of the experience of shame and threats to their dignity by poor children, which penetrate into all aspects of the life of poor children, negatively affects their future, is noted. The study of the role of the family, society, state, and international organizations in the elimination of child poverty in its extreme forms showed that the eradication of child poverty should be a top priority in any country.

The subject of the article is the study of inequality and poverty, taking into account under-reporting household income. The purpose of the research was to estimate the under-reporting incomes of households and their impact on the smoothing income inequality and poverty based on representative data of the All-Russian Survey of Consumer Finance (2013, 2015, 2018, 2020 and 2022). It is relevant to analyze changes in inequality for individual population groups, as well as the contribution to inequality of individual sources of income, including those hidden from statistical observation. The novelty of the study is the obtained estimates of under-reporting household income, as well as the results of an analysis of their impact on smoothing income inequality and poverty based on the specified dataThe methodology included the use of econometric modeling according to the Pissarides – Weber approach, as well as decomposition of the Gini elasticity by income sources based on the Lerman – Yitzhaki algorithm. The results of estimations differ from those previously obtained according to the data of the Russia Longitudinal Monitoring Survey – Higher School of Economics. The resulting share of under- reporting income in the disposable resources of households averaged about 20% for 2013 to 2022 and decreased by 2,3% on average per year. Decomposition of the Gini index by income sources led to the conclusion that the main contribution to inequality was made by the non-poor population. Calculation of Gini income elasticities by income sources for poor and non-poor households (taking into account the imputed component of under-reporting income) revealed their differently directed impact on inequality. Wages and social transfers increase inequality among the poor and do not increase inequality among non-poor households. Estimating under-reporting income was higher for the group of poor households. At the same time, this component increased inequality in the post-crisis year 2015 and in the pandemic year 2020 for the group of non-poor households. The obtained results will provide important information to social policy makers, taking into account the influence of under-reporting income` on the poverty reduction and equalization of the standard of living of the Russian population