couples with 2 children (1.46 million), single parents with 1 child (0.44 million), and single parents with 2 children (157,000). About 15 percent, 595,146<sup>18</sup> families, display earning levels within the critical threshold that would generate poverty traps if the inactive parent was to enter formal employment.<sup>19</sup> However, single parent families are those at greatest risk, as nearly a third fall within these critical thresholds. Appendix A includes earnings’ distribution for all family typologies. When restricting the distribution of earnings to families with children of similar age to those in the model, it is still apparent that as many as 29 percent of earners were, in 2014, at the critical levels that would today make employment unattractive.<sup>20</sup> This finding is consistent with microsimulations that have been carried out to synthetically estimate the labor supply response of 500+ (Myck 2016).<sup>21</sup> Further, according to the LFS data, among the inactive 47 percent of the total population who report the reason for inactivity to be ‘household matters’, only 22 percent are male while 62 percent are female (Appendix C). This, in turn, means that while the TBM model presented in this paper is silent as to whether the principal earner is male or female, it is likely that the second earners affected by work disincentives are women.

However, using this type of model also has drawbacks. It cannot account for potential broader effects that the 500+ program may have in the long run, e.g. on the improved ability for long-term family planning. Further, this analysis only provides a preliminary look at the de jure system and needs to be corroborated with actual data on labor market behavior of women in Poland to create a coherent picture. Once these data (e.g. LFS) become available, a clearer picture on the labor market effects of the 500+ program will emerge. Further, this type of analysis only regards labor market entry incentives on the basis of net income. While income is certainly an important aspect, it is not the only factor that influences labor market choices and therefore might disregard e.g. the motivation to work for increased pension contributions over time as a long-term investment strategy.

- **VI. The Price of Making Work Affordable for Mothers of Young Children**

- **a. The Rationale for a Childcare Subsidy**

Issues of care and family support have risen to the top of the Polish policy agenda with much of the new national government initiatives focusing on these efforts. However, as childcare availability remains low, local governments are increasing their efforts to support families. For example, the municipalities in Szczecin and Nysa have introduced childcare vouchers for children under the age of 3. The care voucher introduced under the ‘Family-friendly Szczecin’ program has

> 18 Breakdown by each family type that falls within the poverty traps: Married 1 Child: 271,297 families; Married 2 Children: 132,446 families; Single Parent 1 Child: 138,964 families; Single Parent 2 Children: 52,440 families.

> 19 These estimates drop zero income households from the analysis and include all family types, before accounting for the age of children.

> 20 This number refers to single parent families. For married couples, restricting the distribution of earnings to families with children of similar age to those in the model leads to a 2 percent increase in families who fall into the poverty trap.

> 21 In his paper, Myck (2016) finds that the 500+ program will reduce labor supply among families with children by about 240,000 individuals, principally mothers in families with one child or two children. This finding is consistent with the results in this paper.

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