Child poverty in Spain: Why economic growth is not enough

While Spain consolidates its position as one of Europe’s current economic engines, leading in growth and job creation, a stark social reality persists: today, 29% of children and adolescents live in relative monetary poverty. The figure rises to 34.6% when measured in terms of severe material and social deprivation. In total, 2.7 million minors live in single-parent households or in households with migrant adults.

This level of child poverty is not a temporary anomaly, nor is it simply the result of an adverse economic cycle. On the contrary, it coexists with economic expansion and employment recovery. That contrast forces a deeper question: why is economic growth not translating into improved living conditions for children?

The 2025 UNICEF Spain report The Benefit of Acting: The Impact of Concrete Policies to Reverse Child Poverty in Spain, produced with the participation of EsadeEcPol’s Department of Economic Policy, addresses this question. Combining poverty data with simulations of public monetary policies, the report delivers a clear conclusion: child poverty is multidimensional and requires a comprehensive response. Monetary measures are necessary — but not sufficient.

Why doesn’t economic growth reach children?

Spain ranks among the EU countries with the highest child poverty rates. The contrast between this reality and overall economic improvement suggests a structural decoupling: growth does not automatically benefit all households, nor does it affect them equally.

Several factors explain this gap — labour market position, household composition, access to social protection systems and more. For children and adolescents, this structural disconnect translates into persistent vulnerability that cannot be corrected by the economic cycle alone. It is also rooted in material and social deprivation.

This is not a cyclical phenomenon; it is structural. And structural problems require responses that go beyond growth

Although fiscal measures such as tax credits have been introduced, child poverty cannot be understood purely in income terms. It combines economic, labour, educational, family and social factors, as well as access to essential services. This complexity demands a broader policy approach.

The high cost of the poverty trap

From this diagnosis, the UNICEF report advances a key argument: reducing child poverty has a cost —approximately €5.500 million— but failing to act costs far more.

The estimated cost of structural losses in human capital and collective wellbeing amounts to €63 billion (around 5.1% of GDP, according to Spain’s High Commissioner against Child Poverty). While less visible in the short term, these losses are far greater over the medium and long term.

The reasons are clear. Child poverty affects educational development, physical and mental health and future opportunities. Its consequences persist for decades.

This dynamic forms the so-called “poverty trap.” Poor living conditions generate cascading effects: educational disadvantages — including lower academic performance and higher dropout rates — equivalent to the loss of two years of schooling. Health outcomes are also affected, with higher rates of obesity and depression, leading to increased healthcare costs and reduced life expectancy.

By contrast, the annual cost of the most ambitious support measure simulated — a Universal Child Benefit (PUC for its Spanish acronym) of €200 per month — would amount to approximately €18 billion. This is significantly lower than the €63 billion estimated cost of inaction. In other words, failing to address child poverty could cost three to four times more than implementing substantial support measures.

Beyond fiscal calculations, inaction also produces intergenerational effects, weakens human capital and undermines long-term productivity.

Two economic measures under review

The report evaluates two main economic policy options, simulated in real contexts by EsadeEcPol.

The first is the PUC, a monthly payment per child ranging from €100 to €200. Its universal design allows it to reach a wide range of households and would significantly reduce child poverty. However, it entails a substantial fiscal cost.

The second option is reinforcing Spain’s Minimum Income Scheme (IMV, for its Spanish acronym) by increasing child supplements by 20% to 40%. This approach is more targeted and offers a strong cost-impact ratio. It is more efficient and fiscally manageable, though its transformative reach is more limited.

The simulations clarify the trade-offs: the universal benefit has greater impact but requires greater fiscal effort; strengthening the IMV is more efficient and viable but less transformative. The report ultimately leans toward prioritising the PUC as a central pillar, combined with improved targeting and coverage of the IMV.

Yet neither measure is presented as a standalone solution. Rather, they serve as tools to quantify the problem and evaluate complementary public policy options.

Where does effectiveness break down?

One of the report’s most important insights concerns the phenomenon of non-take-up: many households eligible for benefits do not receive them.

Spain’s Independent Authority for Fiscal Responsibility (AIReF, for its Spanish acronym) estimates that 55% of households eligible for the Minimum Income Scheme do not apply.

Policy effectiveness depends not only on design but on actual reach

The reasons for non-take-up are varied: lack of information, bureaucratic complexity, stringent requirements and the stigma associated with receiving benefits. The result is that the potential impact of policies is significantly reduced.

This shifts the focus from what policies exist to how they are implemented. Simplification, accessibility and proactive outreach are essential to ensure that support measures truly reach those who need them.

The case for integrated policies

UNICEF’s conclusion is clear: monetary transfers are necessary but insufficient. Tackling child poverty requires an integrated approach.

Education plays a decisive role in preventing intergenerational transmission of poverty. Health is fundamental to child development. Labor market stability directly shapes household security.

Other policies also have indirect but decisive effects: energy efficiency measures and social energy bonuses, access to adequate housing, childcare and work-life balance services, school meal programs, personalised tutoring and the quality of public services in vulnerable areas.

A coherent and aligned combination of these policies addresses the structural roots of the problem, moving beyond a purely economic lens toward a systemic and sustainable solution.

Design, reach and coherence

Rather than a paradox, the persistence of child poverty reveals that policy design and implementation matter as much as their existence. A more robust and sufficiently generous social protection system is required to produce meaningful change.

As the report shows, there is room for action. Levers with measurable impact exist. The challenge lies in coherence: prioritising those most in need, ensuring adequate coverage, preventing self-exclusion and aligning incentives across policy domains.

Equally important is what the report calls “sufficient generosity”: support must be large enough to make a real difference.

If economic growth alone cannot reduce child poverty, the question is no longer whether to intervene, but how to do so more effectively — and with what combination of policies.