A universal payment of €50 per month per child aged under six could take 800,000 children out of poverty across Europe, according to a study commissioned by the European Commission into the potential effects of introducing a child basic income.

The researchers made use of EUROMOD, the tax-benefit microsimulation model for the EU, to look at the distributional implications (within and between countries) of an illustrative child basic income operated and funded at EU level.

Key findings

• Paying €50 (around £40) per child a month – on top of existing provision in individual states – would reduce the number of children aged 0–5 in poverty by 14 per cent (800,000 children), and close the poverty gap of those remaining below the threshold by 6 per cent.
• Most member states, and virtually all families with children aged under six, would be net gainers.
• The gross cost of such a scheme would be 'modest', ranging up to around 0.15 per cent of EU national income. Assuming the scheme was funded through a flat tax, the required rate throughout the EU would be not more than 0.2 per cent of all incomes.

Source: Horacio Levy, Manos Matsaganis and Holly Sutherland, The Distributive and Cross Country Effects of a Child Basic Income for the European Union, Research Note 2/2012, Social Situation Observatory (European Commission)
Link: Research Note