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Social and Fiscal Impact of New Family Allowance

Monthly Report - December 2009 (PDF version).

"The Fiscal and Social Impact of New Family Allowance"

By Ramiro Castiñeira

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own initiative or an advance on the agenda of the opposition, the fact is that the Government announced the plan for "Universal Family Allowances." The measure seeks to extend the benefit of the family allowance the State seeks to all registered workers, workers now also working in the informal economy or unemployed.

family currently has a maximum allocation of $ 180 per month for each child under 18 by the worker. The system covers 4.3 million children, at an annual cost close to $ 10,000 million, equivalent to 0.8% of GDP. However, the population under 18 years in Argentina more than 12.4 million, which implies that the current social security system covers only 35% of age group.

The remaining 65% (equivalent to 8.1 million children) do not enter the benefit either because their parents working in the informal economy or are unemployed, or at the other end and being at least, do not access for being registered by workers with salaries over $ 4,800. Neither access when not under dependency ratio be monotributistas, self, professional, and pattern.

In this universe of 8.1 million children, it is clear that the government established new requirements for targeting the household allowance only to the most vulnerable children. With this aim requires a certificate attesting that the child is current with the national vaccination schedule and for more than five years of age also require a certificate of regular attendance at public educational establishments. But even meeting these requirements only Parents will have access to working in the informal economy, have incomes below the minimum wage.

demands tend to focus assistance to poor households while granting financial incentives for health care and education of children in vulnerable households. But the truth is that it also carries a horizontal discrimination because the worker does not operate such registration requirements, while the monthly income ceiling to qualify for the benefit is more than three times the minimum wage.

In sum, there is now a social consensus on the need to give a response from the State children under 18. But the differences are minor and do not as a support point to a universally without any condition, while others point to grant a subsidy to enable more targeted to attend only the most vulnerable children, noting the presence of a budget constraint in the State.

This report aims to deepen the analysis. To do this, we first present a picture of the situation in Argentina social structure. Then continue with an analysis of current social assistance programs that have state the explicit goal of alleviating poverty in households with children. Finally, there will be a analysis of the recent program launched by the Government, as also estimate the number of households and children who are favored by the new universal allocation, as well as their fiscal cost and form of financing.