The Impact of Pensions, Transfers and Taxes on Child Poverty in Europe: The Role of Size, Pro-Poorness and Child Orientation
By Ron Diris (KU Leuven), Frank Vandenbroucke (University of Amsterdam) & Gerlinde Verbist (University of Antwerp)
We assess the impact of redistributive policy on child poverty across 29 European welfare states, using EU SILC 2005–2012. We distinguish between spending on pensions, spending on other cash transfers and taxation. For each of these instruments of redistribution, we further distinguish three features: size, pro-poorness and targeting towards households with children. Pensions are generally neglected in analyses on child poverty, but are relevant through the presence of two, partially offsetting, forces. Increased pension spending weakens the relative income position of children, but pensions also substantially contribute to the household income of children from multigenerational households. This ambiguous result signals a challenge: while reductions in pension spending may be desirable in the long run in several European welfare states, policymakers — especially in Southern and Eastern Europe — should be aware that this not only directly involves income losses for the elderly, but also for a non-negligible share of (predominantly poor) children.
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