The Effect of Child Benefits on Financial Difficulties and Spending Habits: Evidence from Poland's Family 500+ Program

Abstract

In response to the low fertility rate and high child poverty in Poland, the government implemented the Family 500+ program which provides cash transfers to families with two or more children, and low-income, one-child families. Using a difference-in-differences approach, we explore the causal effect of this policy on expenditure and financial difficulties of beneficiaries relative to non-eligible families. The findings suggest that after the introduction of the program, expenditures on food and cultural activities increased, and the likelihood of experiencing a hardship paying for utilities and medical care declined for the treatment relative to the control group. These results imply a beneficial effect of child benefits on tackling financial difficulties of families with children. From a policy perspective, the findings indicate that cash transfers can alleviate child poverty concerns and financial constraints to having children.