Size matters: poverty reduction effects of means-tested and universal child benefits in Russia

Abstract

This paper evaluates a policy change from universal to means-tested child allowances in terms of targeting efficiency and poverty reduction taking the introduction of means-tested child benefits in Russia as a case study. We use the Russia Longitudinal Monitoring Survey (RLMS) from 2000 to 2004 to analyze the impact of the reforms and to simulate the effects of various means-tested and universal child benefit schemes. Since the reforms in 2000, more children receive benefits and there is improved targeting of low income households. Nevertheless, both inclusion and exclusion errors are considerable and although the poverty reduction impact improved marginally since the reforms, its effect on child poverty is small. Our simulations show that universal schemes achieve additional poverty reductions in all indicators because previously excluded children now also receive a benefit. But size matters most; only by increasing benefit levels considerably, more substantial poverty reductions can be achieved.