**welfare impacts of public policies supporting families with children** . In this paper, we incorporate a childfocused perspective into fiscal incidence analysis to provide valuable insights into the impact of the entire fiscal system on child poverty. By examining fiscal incidence through the lens of children, this approach offers a valuable diagnostic tool that can aid decision-makers in identifying specific areas within fiscal policy that require reform to address child poverty effectively. Furthermore, we simulate the potential impacts of fiscal reforms on child poverty in Bulgaria. By running various policy scenarios, we can assess the potential effects of different policy options and identify measures that could effectively reduce child poverty rates in the country. The objective is to provide policymakers with evidence-based insights and recommendations for designing effective fiscal policies that promote economic growth, reduce poverty, and mitigate inequality, focusing on improving the well-being of children and vulnerable households.

# **In this study, our primary focus lies in comprehending the effectiveness of child-related interventions**

**aimed at reducing child poverty** . However, we also recognize the significance of examining the entire fiscal system, encompassing interventions not exclusively aimed at families with children, as these policies can interconnect and impact child poverty outcomes. It is essential to avoid evaluating anti-poverty transfer policies in isolation from the taxes that households contribute to financing them. Recently, there has been a growing awareness of the crucial connection between anti-poverty policies and the corresponding tax mechanisms used to fund them, highlighting the need for a more comprehensive and interconnected approach to address poverty and its associated interventions.

**The paper is organized as follows.** In Section II, an outline of social protection programs aimed at families with children in Bulgaria is provided. Section III outlines the methodology, emphasizing income concepts, data, assumptions, and the creation of various household typologies to adapt the CEQ methodology for a child-centric perspective. Sections IV and V then showcase the primary findings and simulations of potential policy changes to mitigate child poverty. Finally, the paper concludes in Section VI, summarizing the key takeaways and policy implications.

- II. Overview of the Bulgarian fiscal system to identify components that affect the welfare of families with children

# **In this section, we first provide a summary of the fiscal system in 2020**<sup>**8**</sup> **tailored to address the specific**

**needs of households with children.** Our analysis focuses on the array of programs and policies designed to support families with young children, including those during the maternity leave period and parental leave, as well as those aimed at assisting families with older children and adolescents, including targeted social assistance and in-kind benefits and tax deductions targeting households with children. By examining the diverse range of initiatives within the social protection and tax framework, we aim to understand how the fiscal system adapts to the varying needs of families at different stages of the child's development.

**The Family Allowances for Children Act (FACA) establishes various family support policies, such as pregnancy allowances, child-raising allowances, and school attendance allowances.** Some of these policies are universal, while others are based on income and assets tests (means-tested) or other criteria. The FACA also covers family allowances for children with disabilities, single-parent families, foster families, and kinship care families, regardless of income. On the other hand, the Social Insurance Code regulates

> 8 This summary is based on (European Union, 2021) and (Tosheva, E. et al., 2022)This is the baseline year for this analysis, given the micro data availability. Some changes in the social protection system occurred between 2020 and 2022.

7