Two decades of child-contingent policies and redistribution in Spain

Abstract Tax-benefit systems play a crucial role in supporting families by providing cash assistance for childrearing. This support helps cover the costs associated with raising children while also contributing to income redistribution. In this paper, we examine the redistributive effects of child-contingent cash support in Spain, a country marked by high child poverty, high income inequality, and low fertility rates. Our study covers nearly two decades of profound socioeconomic changes (2005–2022). We focus on the redistributive effects of child-contingent payments, including both benefits and tax reliefs tied to having children. Our findings indicate that child-contingent benefits, rather than tax reliefs, are the primary drivers of income redistribution to households with children. While these benefits are generally highly targeted, their low average transfer rates limit their redistributive impact. We show that changes in redistribution result not only from discretionary policy adjustments in child-contingent payments but also from their automatic response to shifts in the socioeconomic characteristics of the population.