Abstract:

The education-related allowances as part of the governmental social policy are aimed to protect the living standard of families with children in education and, consequently, to promote the access of poor children to education. Our paper is focused on the effectiveness of education-related allowances for child poverty reduction in Romania, which is the European Union country with the highest child poverty incidence. A considerable amount of Romanian families with children in education benefit of universal or means-tested allowances that are linked to the educational enrolment of their children, but a comprehensive evaluation of their effect on poverty reduction among them is still lacking. The education-related allowances have not been on the governmental agenda until recently, when during the economic crisis, after cutting the amounts of many other social benefits in order to cope with the increasing fiscal deficit, the education-related allowances became a very important instrument for helping families with children to keep them in school. Therefore, we attempt to assess the extent to which these social benefits could be beneficial for the enhancement of the living standard of poor families with children, by using a micro simulation framework. Based on EU-SILC micro data for Romania and using the EUROMOD tax-benefit model as a simulation tool, we evaluate the influence of education-related benefits on the disposable income at household level. We estimate the aggregate size and the distributional effects on incomes. We calculate the poverty indicators (at-risk-of poverty rate, poverty gap) in the presence and absence of education-related benefits and compare them in terms of relative change. Based on the findings and as an attempt to increase the poverty reduction effects of education-related allowances, we propose certain changes concerning these benefits and, using the same micro simulation framework, we assess their impact on poverty reduction as well.

Keywords:

Education-related allowances, income, poverty, microsimulation.