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YES! topic 2018

How to Combat Child Poverty and how can Children and Adolescents be Best Supported?

by Holger Stichnoth, a researcher at ZEW Centre for European Economic Research in Mannheim

Selected by Fritz-Erler-Schule Pforzheim Team II and Windeck-Gymnasium Bühl

In Germany, many children and young people in households are living below the at-risk-of-poverty threshold. This also has long-term effects. Studies have shown that success in education and other important things (such as health, life expectancy etc.) are heavily dependent on the home.

At the same time, Germany has a developed welfare state and social expenditure represents an essential part of the federal budget. Most of the support for children and young people in low-income families comes in the form of cash payments, e.g. unemployment benefits II (‘Hartz IV’), housing benefit or child supplements. There are also benefits such as child allowance, which all families are entitled to regardless of income. Most services specifically aim at single parents, for example, maintenance payments. As well as these cash payments, families also receive support through benefits in kind and services offerings. This includes childcare (parental contributions are made on a sliding scale based on social status, and only cover a portion of the actual cost), free education and support as part of the education and participation package, as well as child and youth welfare services. Benefits in kind and service offerings are often justified by the fact that the support reaches the children or young people in this way. However, the education and participation package shows that parents and public administration have significantly higher expenses with this kind of support in comparison with cash payments.

The challenge is putting the existing system to the test and making suggestions to combat child poverty and to support children and young people in the best way possible.

It is helpful first of all to define the objectives of the support. After that, specific questions should be answered, including the following: Is the current amount of support right, too much or too little? What is the best way of combining cash payments with service offerings and benefits in kind?  Which specific services should be expanded, which should be abolished and which should be reformed? What can Germany learn from its past (west and east) and other countries? Are there ideas for providing support in an entirely new way?

Something that should be remembered is that all expenditure must be financed by taxes and social security contributions. More generous support must, therefore, be paid by somebody, and these people may also have children. Also, support for children and young people is always in competition with various other policy projects.

Holger Stichnoth

Holger Stichnoth joined ZEW in 2009 and is Senior Researcher and acting head of the Research Group „International Distribution and Redistribution“. He works primarily on family economics, on the nexus between immigration and redistribution and on the microsimulation model of the German tax and transfer system, and has coordinated several consulting projects at ZEW carried out for federal ministries in Berlin and for the German Council of Economic Experts (Sachverständigenrat).

Institution: ZEW – Centre for European Economic Research
YES! Participations: 2018