Tax credits for dependent children and child benefits: what do we learn from the Italian experience?

This paper assesses the relative merits of tax credits for dependent children and child benefits in redistributing income and alleviating poverty in Italy. The main result is that the great emphasis put by Italian policy‐makers in designing tax credits in the last 15 years has been mostly misplaced if the aim was that of supporting low‐income households. On the other hand, child benefits – potentially a more effective tool – have not proven to be a growing source of redistribution in the same period. Overall, the Italian experience shows a rather uncertain path in helping families with children, with comparable results achieved by very complex and much simpler tax/benefit systems.