Abstract
In response to the low fertility rate and high child poverty in Poland, the government implemented the Family 500 + program which provides cash transfers to families with two or more children, and low-income, one-child families. Using a difference-in-differences approach, we explore the causal effect of this policy on expenditure and financial difficulties of beneficiaries relative to non-eligible families. The findings suggest that after the introduction of the program, expenditures on food and cultural activities increased, and the likelihood of experiencing a hardship paying for utilities and medical care declined for the treatment relative to the control group. These results imply a beneficial effect of child benefits on tackling financial difficulties of families with children. From a policy perspective, the findings indicate that cash transfers can alleviate child poverty concerns and financial constraints to having children.
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Data availability
The dataset used for this research is the Polish Panel Survey (POLPAN), Waves 5–7 (2008 – 2018), v. 200129-U-1234567. It is made available by the Institute of Philosophy and Sociology, Polish Academy of Sciences, Warsaw, Poland.
Notes
Aizer et al. (2016) show that cash transfers to poor families with children are associated with child longevity in these families.
Almond et al. (2011) show that poor nutrition is related to lower test scores of children.
Hoynes et al. (2016) document a positive effect of the Food Stamp Program during childhood on long-term health outcomes, including lower risk of obesity, diabetes, and high blood pressure.
Through a difference-in-differences approach, Magda et al. (2018) find that the benefit reduced labor market participation of women with children compared to those without. The effect of the program was more pronounced for less educated women and those who live in small cities.
There is a similar study for Spain conducted by Gonzalez (2013) who finds no significant change in the consumption of child-related goods and services as a result of the introduction of child benefits in the country.
The average exchange rate in 2016 when the program was implemented was one Poland zloty (PLN) to 0.254 U.S. dollars (USD).
For the outcomes capturing expenditure on food and cultural activities, clustering standard errors at occupation, or occupation and age level alter the results extracted from the whole sample only slightly, but reduce the sample size by about half, so we chose to use only individual-level robust standard errors.
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Milovanska-Farrington, S. The effect of child benefits on financial difficulties and spending habits: evidence from Poland’s Family 500 + program. Int Econ Econ Policy 19, 719–739 (2022). https://doi.org/10.1007/s10368-022-00534-9
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DOI: https://doi.org/10.1007/s10368-022-00534-9