Taxing family size and subsidizing child-specific commodities?

Fertility, Taxation and Family Policy*

“…There is a growing public finance literature on the relationship between taxation and family size 3 . The model used in this paper is particularly close to, though simpler than, those in Balestrino (2001) and Cigno and Pettini (2001). Our paper, however, has a much more specific policy focus.…”

“…3 3 See, for example, Balestrino (2001), Balestrino, Cigno and Pettini (2002)Cigno (1986, 1996, 2001), Cigno and Pettini (2001), Cremer, Dellis and Pestieau (2003) and Fraser (2001). …”

Are family allowances and fertility-related pensions perfect substitutes?

“…The possible outcome that the availability of a superior policy instrument leads the government to taxing children and at the same time paying net benefits to families is not new in the literature. Peters (1995) discusses a quantity-quality trade-off, where taxing children would be combined with subsidizing education, and Cigno and Pettini (2002) show that taxing children may be combined with subsidizing child-specific commodities to achieve some distributional goal.…”

Family size and optimal income taxation

“…The first possibility considers explicitly a consumption vector consisting of several goods. This opens the door to possible subsidies for child-specific commodities like in Cigno and Pettini (2001). Alternatively, one could resort to policies targeted towards children.…”

“…This agency problem could induce the government to resort to policies directly aimed at children. By assuming a single consumption good, we cannot rely on indirect taxation that could foster child-specific goods rather than parents-specific goods; see Cigno and Pettini (2001).…”