Social Situation Monitor Seminar on the measurement of the efficiency of social protection systems

Transcription

1 Social Situation Monitor Seminar on the measurement of the efficiency of social protection systems 27 May 2013 Hôtel Léopold - Rue du Luxembourg Bruxelles 1 P O V E R T Y R E D U C T I O N C A P A C I T Y O F F A M I L Y T R A N S F E R S. W H A T C A N W E L E A R N A B O U T C O U N T R Y P E R F O R M A N C E U S I N G T A X - B E N E F I T M I C R O S I M U L A T I O N? L I N A S A L A N A U S K A I T E C E N T R U M V O O R S O C I A A L B E L E I D H E R M A N D E L E E C K, U N I V E R S I T E I T A N T W E R P E N

2 Background Outline More detailed look at microsimulation study: 2 Is the neighbour s grass greener? Comparing family support in Lithuania and four other New Member States : Aim of the study Methodology and simulation scenarios Results Conclusions and policy lessons

3 3 CHILD POVERTY AND FAMILY BENEFITS

4 Children at risk-of-poverty (2008) Children in poor single parent or large families, are of particular policy concern (TÁRKI, 2011). ~ Half of the EU poor children live in these two household types (Commission of the European Communities, 2008). 4 % 50 Households with children 2 adults & 1 child 2 adults & 2 children 2 adults & 3+ children Single parent with children EU SI CZ EE HU LT Source: EUROSTAT

5 What reduces it? Major determinants: Socio-demographic characteristics of the family Parents labour market position Overall tax-benefit policies The role of transfers to families: Often insufficient and not meant to fully eliminate child poverty Up-to recently, the major findings were: Size of the budget: higher spending is associated with lower poverty; Design: priority to universal vs. means-tested programmes Interlinks between size and design: universal systems have both higher budgets available and larger poverty reduction effectiveness Current empirical evidence is still scattered but no longer supports many of the above statements 5

6 6 IS THE NEIGHBOUR S G RASS G REENER? COMPARING F A M ILY SUPPORT IN LITHUANIA A ND F O UR OTHER NEW MEMBER STATES Salanauskaite, L., & Verbist, G. (2013). Journal of European Social Policy (forthcoming)

7 Motivation and aim 7 Large and single parent families in Lithuania are found continuously with acute levels of at risk-of poverty rates; Family benefit system inefficient (TÁRKI, 2010) To what extent can one country s success story in achieving low(-er) child poverty rates be attributed to 1) the size and 2) the design of the transfers to families. 5 NMS countries, focus on Lithuania, year: 2008

8 Transfer types differ by country Non-contributory benefits Tax reliefs 8 LT EE HU SI CZ Birth grant Child benefit Allowance to large families Means tested allowance Per capita benefits, EUR Tax allowance Tax credit Per capita tax relief, EUR

9 Design of transfers Very different designs, e.g. a universal child benefit: 9 LT EE HU Age thresholds 18 (24) 17 (20) ~17 (~20) Size: with child age No No Size: with # of children Extra: for single parents No Yes Yes Extra: for young children Yes Yes No Extra: age thresholds 3 3 (8) No Benefit per recipient, EUR

10 Methodology 10 Microsimulation using EUROMOD tax-benefit model. Underlying micro data: EU-SILC (+National SILC); a sample of administrative records. Income reference years: 2005/2004. Major model assumptions: Static modelling; Full take-up of benefits and full compliance with taxes and social contribution; Data alignment to policy years using income uprating factors; Model derived disposable income includes both survey observed and simulated components.

11 Without With Without With Without With Without With Without With Poverty reduction effectiveness of original settings 11 Powerful poverty reduction tool Smallest capacity to reduce poverty - in Lithuania Children in large (3+) families - in single parent families LT EE HU SI CZ

12 Simulation scenarios 12 3 scenarios: budget neutral and full swap of policies Borrowed policies in LT LT policies in other NMS I. Swap of benefits: full & budget neutral II. Swap of benefits & tax advantages: full & budget neutral III. Swap of benefits & tax advantages: budget neutral Scenario outcomes are established using floating poverty rates (60% of median) Statistical significance of simulation results: for comparing simulated and baseline point estimates, we take account of the covariance between those variables.

13 13 Simulation results

14 Swapping benefits only Overall, better poverty results Large families are major winners Dominant size effects, except of Slovenian policies (size=design) 14 Poverty, % LT actual Budget neutral swap Full swap EE HU SI CZ EE HU SI CZ Children in large (3+) families in single parent families

15 Swapping benefits & taxes Tax reliefs have significant poverty reduction effects - even in budget neutral conditions Single parent families benefit only if transfer sizes increase, and only under HU and CZ policies 15 Poverty, % LT actual Budget neutral swap Actual swap EE HU SI CZ EE HU SI CZ Children in large (3+) families - in single parent families

16 LT benefits & taxes in NMS 16 Lithuanian policies do not have large poverty reduction effects because of specific national circumstances? No. Worsening poverty situation in all countries - and particularly in CZ. Poverty, %: EE HU SI CZ actual LT actual LT actual LT actual LT Children in large (3+) families - in single parent families

17 17 CONCLUSIONS A ND P O LICY LESSONS

18 Conclusions Both benefits and tax advantages are important Both size and design of the transfers matter A mix of universal and means-tested transfers achieve the best poverty reduction effects Design features of the best policies: 18 High coverage of large families Benefit level is not varied with the child s age Benefit level dependent on family income A generous means-testing threshold No effective policy design to combat child poverty in Lithuanian single parent families only size matters

19 Policy lessons Poverty reduction capacity of family transfers go beyond the single policy boundaries: depend on socio-demographic settings depend on other tax-benefit policies 19 Poverty reduction capacity of family transfers in LT can be large(r), as illustrated by the results observed in EE, HU, SI and CZ An exchange of good practices across countries should be done with care and taking into account the specific national settings

20 Thank you 20 C E N T R E F O R S O C I A L P O L I C Y, U N I V E R S I T Y O F A N T W E R P L I N A. S A L A N A U S K A I T U A. A C. B E