| Summary: | Inequality and the risk of poverty in Icelandic society have been in the debate since the economic crisis in 2008. The family policy is criticised by academics for a lack of economic support for individuals with dependent children both in the form of child benefits and low payments during parental leave. The purpose of this thesis is to analyse how economic support for families of cohabitating parents and single parents with average and minimum incomes is distributed. The data used for the analysis is mainly gathered from Statistics Iceland, a public institution, and the Ministry of Welfare. As a guideline to the analysis a theoretical framework was created that makes use of the concept of family policy, inequality and poverty and transformations in the welfare regimes. The findings of this study suggest that the family policy helps in reducing the risk of poverty among families with dependent children. However, the income tested child benefits are highly income sensitive with strict curtailment limit. Regarding the payments during parental leave there are indications they are too low. Low maximum payments during parental leave are linked to reduced birth rates and a decrease in the number of fathers using their rights to take time off from work to spend with their newborns. There is a severe difference in economic support of single parents and cohabitating parents in form of benefits and subsidies. Single parents with dependent children receive more economic support nevertheless it does not seem to be enough. Single parents need more economic support to prevent them from falling below the threshold of being at risk of poverty. Furthermore sustaining an acceptable living standard in Iceland for a single parent with dependent children seems to be a distant goal.
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