The Impact of Family and Child-Allowances on Income Inequality in Poland. Gini Decomposition by Income Sources

Wędrowska Ewa () and Muszyńska Joanna ()
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Wędrowska Ewa: Department of Economic Applications of Informatics and Mathematics, Nicolaus Copernicus University, Faculty of Economic Sciences and Management, Gagarina 13a, 87-100 Toruń, Poland
Muszyńska Joanna: Department of Econometrics and Statistics, Nicolaus Copernicus University, Faculty of Economic Sciences and Management, Gagarina 13a, 87-100 Toruń, Poland

Folia Oeconomica Stetinensia, 2021, vol. 21, issue 1, 144-160

Abstract: Research background: This paper analyses how different income sources affect the level of inequality in Poland, with focus on the role of family and children related allowances in decreasing income inequalities in 2015–2017. Therefore, the study has focused on the various subgroups of households with children. Purpose: The paper is aimed at examining the extent to which family and children related allowances affect household income inequality and identifying whether they affect inequality in various groups of households in the same way. Methodology: The study was carried out on micro-data gathered by Eurostat. To examine the extent to which different income components affect income inequality, we decompose the Gini coefficient according to the method introduced by Lerman and Yitzhaki. Results: Our study revealed that for most households with children, the inequality-reducing effect due to family and children related allowances increased in 2017 compared to 2015. However, despite the additional child-raising benefit under the “Family 500+” programme, income taxes and social security contributions remained by far the most important factor in reducing household income inequalities in Poland. Novelty: To our knowledge, no study has yet attempted to assess the extent to which family and child-allowances affect income inequality based on real data. The present analysis takes a step towards filling this gap. Unlike other studies based on microsimulation, in this paper we made use of the representative micro-data derived from the EU-SILC study.

Keywords: household income; income inequality; Gini coefficient; income source decomposition; EU-SILC (search for similar items in EconPapers)
JEL-codes: D31 D33 D63 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:foeste:v:21:y:2021:i:1:p:144-160:n:1

DOI: 10.2478/foli-2021-0010

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