Cash Transfers and Guaranteed Minimum Income Programs:
Research, Evaluation, and Policy
Prague, Czech Republic
September 9-10, 2024
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“The Political Economy of Targeting: An Empirical Assessment of Poland’s Family 500+ Programme”
Stephanie Roost, UNU-MERIT, Maastricht University
Questions surrounding the allocation and design of social transfers have long intrigued scholars and policymakers in the field of political economy. While transfers strategically targeting those in most need aim to maximize the value of their benefits and improve their livelihood, the political economy of targeting posits that such restrictive character might dampen general social support. A core idea put forward to explain policy support is that individuals are materially self-interested and will advocate for policies from which they can benefit. The theory predicts that enlargement and retrenchment of welfare systems would shape the preferences of new and former beneficiaries, respectively, influencing the policy’s political sustainability.
Our study delves into the social and political sustainability of social protection systems and explores to what extent a real-life broadening of social protection programs impacts society's redistributive and tax preferences as theoretical predictions. Using longitudinal individual-level data from Poland's Panel Survey, we conduct an event-study analysis to examine the effects of the 2016 transition from means-tested to quasi-universal child benefits on redistributive, tax, and political preferences. Implemented in 2016 by the Law and Justice party (PiS), the Family 500+ programme changed the targeted nature of family cash benefits, which previously consisted of restrictive income-tested transfers. The new program provided a monthly payment for the second and every subsequent child below the age of 18 regardless of household income, as well as a transfer to the oldest child of low-income families. Contrary to expectations from political economy models, our findings reveal nuanced responses among beneficiaries and non-beneficiaries. Beneficiaries do not become more supportive of redistribution, and their political and tax preferences remain similar to those of overall non-beneficiaries. A specific group of non-beneficiaries, the ones with children but excluded due to income requirements, react to the policy change by retaliating against the incumbent party and preferring a tax schedule that shifts the burden to other income groups. Overall, the study advances our understanding of the political economy of social transfers and provides insights for policymakers navigating the trade-offs between targeting efficiency and societal endorsement in welfare policy design.