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Family Benefits in Poland How much do they alleviate poverty?

Family Benefits in Poland How much do they alleviate poverty?. Anna Ruzik (IPiSS. CASE). Marta Styrc (IPiSS. SGH) Research Seminar WNE UW May 29th, 200 8. Motivation and aim of the research. The fact :

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Family Benefits in Poland How much do they alleviate poverty?

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  1. Family Benefits in PolandHow much do they alleviate poverty? Anna Ruzik (IPiSS. CASE). Marta Styrc (IPiSS. SGH) Research Seminar WNE UW May 29th, 2008

  2. Motivation and aim of the research The fact: • In Poland poverty rate among households with children is relatively high, especially compared to older people households Research questions: • What was the impact of family benefits paid to hh with children on the poverty rate and the poverty gap in 2003 and 2004? • What was the effect of the 2004 reform of family benefits? • What types of households are more probable to be poor in Poland?

  3. Reform of the family benefits (selected changes) • Implemented in 2004, rules in force since 1st May 2004 • Various benefits paid to families were replaced with one benefit and additional payments to it • Aim of the reform - better targeting of the benefits • Decreasing the thresholdnet monthly income per household member(548.00 PLN  504.00 PLN) • Small increase in the level of benefits • Movement from the level of family allowances dependent on the number of children to the one dependent on the children age

  4. Data and definitions • HBS 2003 and 2004 • 4 categories of family benefits • Family allowance • Social assistance benefit for pregnant women and a parent taking care for a child • Child care benefit • Alimony benefit (from the Alimony Fund) • Definition of poverty • Monetary poverty (income) • Poverty line: subsistence minimum

  5. Incidence of the family benefits

  6. Level of the family benefits

  7. Incidence of family benefits by family type [%]

  8. Avg monthly benefits per hhby family type in 2003 [PLN]

  9. Avg monthly benefits per hhby family type in 2004 [PLN]

  10. Poverty calculation • Poverty line: subsistence minimum: 355 PLN in 2003 and 371 PLN in 2004 • The measure of household’s welfare: disposable income • OECD equivalence scale: 1; 0.7; 0.5 • Poverty rate - the percentage of people with income below poverty line • Poverty gap - the mean income shortfall below the poverty line (expressed in currency unit or as a share of the poverty line)

  11. Impact on poverty rates and poverty gap in 2003

  12. Impact on poverty rates and poverty gap in 2004

  13. Poverty reduction impactof family benefit Change of the poverty rates due to the elimination of family benefits from the hh’s income [in percentage points] Percentage change in poverty gap due to subtracting family benefits from the hh’s income [in %]

  14. Conclusions from the first part of the analysis and next research question • Differences in the poverty rates and poverty gaps do not allow for the conclusion that family benefits in Poland are an effective tool in alleviating poverty • Although they reduce poverty rate and poverty gap, their impact is small due to the low benefit level • The 2004 family benefits reform has enhanced the poverty reduction impact of the benefits but only with regard to poverty gap But • Is the presence of dependent children in a household crucial for the risk of poverty?

  15. What influences probability that the household is poor? • 2004 HBS data • Binomial logit model with an odds ratio of those households that are poor to those that are not poor • The explanatory variables are either characteristics of the household head or of the household: • AGE – age of a household head (5 age groups). • EDU – level of completed education of a household head (3 groups). • SEX of a household head. • MARITAL – marital status (not married or married). • PLACE of living (4 types). • CHILD17 – number of children aged up to 17 in a household. • FAMILY_TYPE (couple without children. couple with children. lone parent with children. couple. children and other persons. other without children). • INCOME – the main source of household income.(employees, farmers, the self-employed,old-age pensioners,disability pensioners, non-earned income/ social benefits)

  16. Estimations results

  17. Estimations results, cont.

  18. Conclusions • Benefits for families decrease the poverty rate and the poverty gap and their impact is stronger in households with children • 2004 reform caused stronger reduction inthe poverty gap thanin the poverty rate • Presence of dependent children in the household is an important factor increasing probability of the household to be poor (even after 2004 reform) • However, education of the household head (correlated with his/her employment potential) seems to be even more important That suggests another possible way of helping families with children, i.e. by helping parents to increase their human capital and to find a good job

  19. Thank you for your attention 

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