In contrast to the German tax law there are no child allowances in the social insurance. In this project we analyze their introduction, limited to the statutory pension insurance, using the ZEW tax-transfer simulation model.
We estimate the first round effect that is the relief for families (possibly softened through the interaction between the allowances with the tax and transfer systems) and the fiscal consequences.

In a second step we quantify the expected labor supply and labor demand adjustments (participation and hours of work). Third, we consider two ways of reciprocal financing that are through an increase in the contribution rate to the statutory pension insurance and through an increase of the VAT rate.

See here the final report (only in German).