A theory of child targeting

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Title: A theory of child targeting
Authors: Donni, Olivier
Bargain, Olivier
Permanent link: http://hdl.handle.net/10197/40
Date: Mar-2007
Abstract: There is a large empirical literature on policy measures targeted at children but surprisingly very little theoretical foundation to ground the debate on the optimality of the different instruments. In the present paper, we examine the merit of targeting children through two general policies, namely selective commodity taxation and cash transfer to family with children. We consider a household that comprises an adult and a child. The household behavior is described by the maximization of the adult’s utility function, which depends on the child’s welfare, subject to a budget constraint. The relative effects of a price subsidy and of a cash benefit on child welfare are then derived. In particular, it is shown that ‘favorable’ distortions from the price subsidies may allow to redistribute toward the child. The framework is extended to account for possible paternalistic preferences of the State. Finally, it is shown that, in contrast to the traditional view, well-chosen subsidies can be more cost effective than cash transfers in alleviating child poverty.
Type of material: Working Paper
Publisher: University College Dublin; School of Economics
Keywords: child benefitcommodity taxationintrahousehold distributionsocial welfarepaternalismlabeling
Language: en
Status of Item: Not peer reviewed
Appears in Collections:Geary Institute Working Papers
Economics Working Papers & Policy Papers

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