Research Paper Social Situation Observatory Research Notes 2/2012
The distributive and cross country effects of a Child Basic Income for the European Union
This paper explores the within and between country distributional implications of an illustrative Child Basic Income (CBI) operated and funded at EU level. Using EUROMOD, we establish that a universal payment of €50 per month per child aged under 6 could take 800,000 children in this age group (and their families) out of poverty and would close the poverty gap of those remaining below the threshold by 6%. It could be financed by an EU flat tax of 0.2% on all household income, assuming that it would also be taxed nationally (as the mother’s earned income).
Between countries, the scheme would redistribute income away from richer member states and those with fewer children towards poorer ones and those with more children. Most member states and virtually all families with children aged under 6 would be net gainers. In general, fiscal flows between member states, and also poverty reduction, would be smaller under an EU CBI that was adjusted for purchasing power differences across countries.
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