Dundee Discussion Papers in Economics 182: Regional diversity and child poverty: the case of child benefit and the need for joined up thinking

This paper examines the impact regional diversity in household composition and income has on child poverty. With a focus upon Child Benefit we examine the degree to which regionally specific rates Child Benefit effect levels of inequality for households with children. Using data from the most recently available British Household Panel Study (BHPS) we demonstrate that the current system for Child Benefit acts as a regressive system of welfare. Moving towards a flat rate payment for all children is more progressive for all regions of the UK and for Wales and Northern Ireland a progressive system of higher payments for second and subsequent children is shown to have a still more progressive outcome. Further, we demonstrate that the Child Benefit system can provide an effective and flexible redistributive mechanism for addressing child poverty in a way that is currently not understood.