GINI DP 49: The Fiscalization of Child Benefits in OECD Countries
Welfare states have been subject to a subtle and a sometimes unrecognized transformation: the fiscalization of social benefits. This change of national policy is notable in the area of family policy, where various forms of child tax benefits have been introduced. The composition and level of child benefits varies therefore not only across countries, but also over historical time (Kamerman and Kahn, 1981; MacNicol, 1992; Wennemo, 1994; Gauthier, 1996). In the immediate Post-War period many countries either complemented or replaced various types of income-tested child benefits with universal ones, introducing a shift in the distributive profile of the system. However, far from all welfare states relied only on the principle of universalism in the design of child benefits. Child tax benefits and fiscal policy has often been used as an alternative or complement to social policy legislation. During the era of welfare state stagnation and decline since the mid-1970s some countries have relocated parts of the child benefit package from social policy to the income tax system. During this process of fiscalization, elements of income-testing have once again been introduced to child benefits, thus, adding stronger elements of vertical redistribution between socio-economic groups. The change of scenery involves not only a shift in the relative emphasis of social and fiscal policies in the redistributive budgets of the European countries, but also a greater degree of selectivity and low-income targeting is introduced to the provision of child benefits. ...
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OECD Social, Employment and Migration Working Papers
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