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

Abstract

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