Universalism or Means-Tested Benefits for Children and Single Mothers

Recently, because the Government of the Hong Kong Special Administrative Region (SAR) plans to introduce a means-tested “Old Age Living Allowance”, a hot debate has arisen on whether the new scheme should be universal or means-tested. Although most people would agree that means-tested benefits are more cost-effective in reducing poverty and income inequality than universal ones, some assert that universal transfer by virtue of their universality reach everyone and may thus, depending on the benefit amounts, be more effective in terms of poverty eradication. Nevertheless, in Hong Kong, our knowledge about the impact of universal and means-tested benefits remains inadequate. How effective are these programs in alleviating poverty rates as well as reducing income inequality? To what extent can these programs fill the gap between the current income levels and the poverty line of poor families? Are they financially sustainable in the long term? Compared with older adults, although the poverty of households with children and single mothers have also drawn a lot of attention, they have been largely neglected in our controversy on cash transfer welfare benefits even though a few studies have been conducted to evaluate the effectiveness of universal and means-tested programs for these two targeted groups in Western countries. Therefore, to address this research gap in a local context, we will focus on households with children (aged 17 and younger) as well as single mothers in this study. The purpose of the project is to assess the existing means-tested cash transfer programs and the proposed universal as well as other means-tested programs on their reduction of poverty, income inequality, their financial sustainability in the coming three decades, and their public acceptance. The proposed project will be led by a multidisciplinary and inter-institutional research team consisting an actuary, an economist, a policy analyst, a political scientist, and an expert in social survey – a team with substantial research experience in studying poverty issues from different perspectives using different methodologies, including face-to-face household and phone surveys, micro-simulation modeling, and qualitative analysis based on in-depth interviews or focus groups.Based on the research findings, the proposed project will offer concrete policy recommendations for reforming the current income protection arrangements for households with children and single mothers. The findings of the proposed study are expected to make a substantial contribution to policy debates in Hong Kong and, eventually, improve the living conditions of children and single mothers in the territory.

Funding Source: RGC - General Research Fund (GRF)