Fiscal practices in alleviating child poverty: An analysis of oecd countries

Abstract

Child poverty is defined as individuals who lack the material, spiritual and emotional resources necessary for survival and development, who cannot benefit from their rights and who cannot fully realise their potential. In countries with low rates of child poverty, financial aid for children is at the forefront. However, in countries with high rates of child poverty, there is little or no financial assistance. The study is important in terms of revealing the relationship between fiscal practices and the elimination of child poverty and suggesting policies in line with the results. The aim of the study is to quantitatively analyse the importance of fiscal practices on child poverty rates within the international framework. Fiscal practices subject to the research are child cash tax benefits, paid parental leave and public expenditures for social programmes. Unemployment insurance, unemployment rate, disability sickness insurance, GDP, proportion of children living only with their mothers and youth population are other variables whose effects on child poverty rates will be observed. The analysis was carried out using panel data least squares regression method with data covering 28 OECD countries between 2001 and 2022. As a result of the research, it is observed that child cash tax assistance and public expenditures for social programmes variables have positive effects on the elimination of child poverty. Paid parental leave is a policy that helps working mothers to reduce the difficulties they face when their baby is born. The absence of paid parental leave leads to financial hardship for the mother and thus to a decrease in the welfare of the baby. However, our study finds that paid parental leave does not have a significant impact on the elimination of child poverty according to these two variables. As a result of the study; a 10 per cent increase in family cash tax benefits will reduce the child poverty rate by 5 per cent. A 10-week increase in paid parental leave would reduce the child poverty rate by 0.1 per cent. An increase of USD 1000 per child in public expenditure on social programmes would reduce the child poverty rate by 1.2%. Only increases in the rates determined in these financial applications will reduce the child poverty rate by 6 per cent. For a country with a child poverty rate of 10 per cent, it is possible for the child poverty rate to fall to 4 per cent when these fiscal practices are implemented.