What Should Child Benefit Look Like?

Abstract

The article analyzes the reasons for the lack of a significant impact on poverty of the existing social assistance system and shows the need to improve the latter for families with children. The paper reveals that households with children have significant risks of poverty and constitute more than 70% of all poor households. The article notes that for a sustained increase in population income and poverty reduction, it is necessary to ensure accelerated economic growth as well as growth in real wages, pensions and social benefits. At the same time, effective tools of social protection are needed to bring certain groups of people with a significant poverty depth out of poverty. The article argues that the existing family and child allowances reduce the poverty of families with children only slightly. This is due to several reasons. Firstly, a significant part of benefits to families with children is paid without means testing. Secondly, a considerable proportion of families with children receiving targeted social benefits are not poor. Thirdly, a significant proportion of poor families with children are not covered by social assistance. And finally, the size of most targeted benefits is small. It is obvious that the preservation of the old paradigm of paying child benefits is ineffective and does not contribute to the achievement of the national goal of reducing poverty. The paper shows that the introduction of targeted benefits to low-income families with children under a social contract, bringing the average per capita family income to the subsistence minimum, would increase the targeting of social assistance and its effectiveness in poverty reduction both among families with children and among the population.