Context specificity of childcare out-of-pocket costs and child-contingent benefits
This paper examines the interplay between child contingent income support and out of pocket (OOP) childcare costs in four European countries—Belgium, Poland, Spain, and Sweden. While existing research has extensively analysed cash benefits and early childhood education and care (ECEC) services separately, considerably less is known about how these policies jointly shape families’ income adequacy and labour market participation. Using EUROMOD, enriched with detailed information with regard to legislation on childcare fees, we introduce a novel indicator—the compensation ratio—which captures the degree to which child contingent benefits offset OOP childcare expenses.
Read MoreDecomposing Child Poverty Drivers using UKMOD and EUROMOD: A Comparative Analysis of the UK and selected European countries
This study investigates the drivers behind the divergent trends in child poverty between the UK and five European counterparts—Finland, Hungary, Ireland, Poland, and Spain—from 2011 to 2024. These countries were selected to represent a diverse spectrum of trajectories: Finland and Spain serve as references for persistently low and high rates, respectively, while Poland reports a significant reduction over the analysed period of time. The analysis further incorporates Hungary, which follows the UK’s experience of rising child poverty, and Ireland, which offers a divergent path despite sharing initial similarities with the UK. The analysis decomposes these trajectories into three core determinants: demographic differences, labour market dynamics, and tax-benefit systems. To capture differences due to demographic characteristics, we employ a coarsened exact matching and reweighting technique to generate synthetic populations. Differences in labour market dynamics are captured using four-stage statistical models (estimating the probability of employment, the probability of unemployment, hourly wages, and hours worked) based on counterfactual projections for employment and earnings in the UK that reflect labour market conditions in the comparator countries. Finally, the contribution of the tax-benefit system is isolated through a difference-in-differences (DiD) approach, comparing child poverty rates computed on original versus disposable incomes. This is facilitated by utilizing the static microsimulation models UKMOD and EUROMOD that allows to compute disposable incomes. By quantifying these components, we determine the extent to which demographic characteristics, labour market dynamics, or tax-benefit systems have driven the UK’s relative child poverty trends.
Read MoreEnding child poverty in Spain: Calibrating the fiscal policy tools
Spain has the second-highest child poverty rate in the European Union (EU). Moreover, child poverty has been increasing since 2018, despite a context of economic growth and a decreasing overall poverty rate. The At-risk-of-poverty-or-social-exclusion (AROPE) rate for individuals under 18 was 34.6% according to the latest official statistics, substantially higher than the (also high) overall population rate of 25.8%.
Read MoreAddressing Child Poverty in the EU: The Role of Child-Contingent Payments in 2011-2024
Child poverty remains a persistent challenge across the European Union: approximately 20 million children are at risk of poverty or social exclusion, and the economic costs of child poverty are estimated at an average of 3.5% of GDP annually in Europe (Clarke et al., 2024). Child-Contingent Payments (CCP), comprising cash transfers and tax reliefs linked to the presence of children in the household, constitute a primary policy instrument for addressing this issue. The period 2011-2024 encompasses significant economic and policy shifts: post-Great Recession austerity, the COVID-19 pandemic, subsequent inflation shocks, and the launch of the European Child Guarantee in 2021. Understanding how CCP have evolved and contributed to child poverty reduction during this turbulent period is crucial for evidence-based policymaking.
Read MoreFinancing a Universal Child Benefit by taxing Illicit Financial Flows in Ghana
Universal social protection is increasingly recognized as a central instrument for achieving the United Nations 2030 Agenda commitment to “leave no one behind.” By guaranteeing income security for all, universal policies enhance equity, reduce stigma, and limit exclusion errors that commonly affect means-tested programmes, particularly in low-capacity settings. However, their adoption in low- and middle-income countries (LMICs) is often constrained by concerns over fiscal affordability, driven by cost estimates that assume financing through broad-based and potentially regressive taxation.
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