1. A LITTLE BIG: THE CASE FOR CHILD ALLOWANCES
Steven Pressman

2. What are Child or Family Allowances?
Payments made to families on behalf of their children
Began in France in around 1870 when Val-des-Bois Works made special payments to its workers with children
Problem-- firms doing this are at a competitive disadvantage
Druggists in Austria tried to do this at the industry level in 1908, but the same problems arose
Solution can only be a national system where the government uses tax revenues to provide a fixed payment to families for their children
First national plans set up by France & Belgium after WWI

3. Some Family Allowance Programs
Canada
CA $2,950 for first child; CA $2,730 for second child, and CA $2,734 for third and subsequent children.
Finland
€1,200 for one child; €2,526 for two children; €4,098 for three children; €5,916 for four children; €2,064 for each subsequent child.
France
€117.14/month for two children; €267.21/month for three children; €417.24/month for four children; €150.08/month for each subsequent child. Supplement of €32.95 for children older than 11 and €58.57 for children older than 16.
Germany
€154/month for each of the first three children; €179 for each subsequent child.
Luxembourg
€185.60/month for one child; €440.72/month for two children; €802.74/month for three children; €1,164.48/ month for four children; €1,526.40/month for five children. There is also a €16.17/month bonus for each child aged 6 to 11 and €48.52/month for each child 12 and older.
Norway
NOK 11,640 for each child.
Sweden
SEK 1,050/child each month with supplements of SEK 100 for a second child; SEK354 for a third child; SEK 860 for a fourth child and SEK 1,050 for fifth and subsequent children. UK
£17/week for the first child and £11.40/week for each additional child. US
Not available.

4. Why a Little BIG? Has no negative employment effects
Reduces the total costs of BIG & the higher marginal tax rates necessary to fund a BIG
Powerful force reducing child poverty
Can be financed initially by eliminating tax exemptions for children

5. The Costs of Child Poverty
Center for American Progress estimated the cost at 4% of US GDP (Holzer et al. 2007) in terms of lost income, higher crime and greater health expenditures
NIT/BI experiments found each year in poverty reduced a child’s lifetime earnings by $6,800 in (equal to $33,000 today). With 15 million poor children, this adds to 3% US GDP. Adding crime and health would bring this up to 4%.

6. Child Poverty & Child Allowances
Country & Year
Child Poverty
Child Poverty Without family Allowances
Poverty-Reducing Impact of Family Allowances
Percentage of Poor Children Removed From Poverty Due to Family Allowances
CANADA (2004)
13.2%
25.0%
-11.8%
47.2%
FINLAND (2004)
5.4%
13.4%
-8.0%
59.7%
FRANCE (2005)
24.5%
31.6%
-7.1%
22.5%
GERMANY (2010)
12.2%
22.7%
-10.5%
46.3%
LUXEMBOURG (2010)
15.0%
29.6%
-14.6%
49.3%
NORWAY (2004)
5.9%
10.8%
-4.9%
45.4%
SWEDEN (2005)
6.6%
-4.2%
38.9%
UK (2010)
21.0%
25.4%
-4.4%
17.3%
US (2010)
27.8%
0.0%
AVERAGES (unweighted)
14.6%
21.9%
-7.3%
36.3%

7. Thank you for paying attention!!