Does Fiscal Policy Have a Role in Improving Child Well-Being in Ethiopia?

Washington, DC: World Bank

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Abstract

Taxes, government spending, and public transfers affect the well-being of children and adults, albeit in different ways. There is, however, a dearth of empirical evidence on the impact of these policies on the well-being of children in low-income countries. This policy brief summarizes a recent study by Ambel, Belete, and Fiala (2024), which investigates the effects of fiscal actions on poverty and inequality among children in Ethiopia. The study applies the Commitment to Equity for Children (CEQ4C) methodology on survey data integrated with administrative data. It finds that the fiscal system in Ethiopia is progressive, poverty-reducing, and equalizing for children. However, there are observed differences in the effects of some of the fiscal policy components, as many of these effects are stronger for girls and children in rural areas. The study also highlights the essential role of public services in improving children’s well-being.

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