Is the neighbour’s grass greener? Comparing family support in Lithuania and four other New Member States

Abstract
To what extent can a country’s effectiveness in reducing child poverty be attributed to the size of family cash transfers (that is, both benefits and tax advantages) or to their design? In this paper, we disentangle the importance of each of these two factors, focusing on the family support system in Lithuania and comparing it with four other new member states. Both single parent and large families are increasingly susceptible to poverty in Lithuania. This contrasts with other former communist countries, namely Estonia, Hungary, Slovenia and the Czech Republic, which protect these family types much better.

This paper examines whether their family transfer systems would achieve similar results in Lithuania. We employ the EUROMOD microsimulation tax-benefit model to swap family policies across countries and test whether size or design has greater effects on child poverty reduction in Lithuania. Hungarian, Slovenian and Czech policies would considerably improve the poverty situation among large families. Single parent families would only gain if Lithuanian spending on family transfers increased radically. Estonian policies would lead to mixed results: small gains for large families and losses for single parent families.