Article

Review of Economics of the Household

, Volume 4, Issue 2, pp 99-111

First online:

Does the Representation of Household Behavior Matter for Welfare Analysis of Tax-benefit Policies? An Introduction

  • Olivier BargainAffiliated withIZACHILD Email author 
  • , Miriam BebloAffiliated withZEW
  • , Denis BeningerAffiliated withZEW
  • , Richard BlundellAffiliated withIFSUCL
  • , Raquel CarrascoAffiliated withUniversidad Carlos III
  • , Maria-Concetta ChiuriAffiliated withUniversitá di BariCHILD
  • , François LaisneyAffiliated withZEWBETA-Theme, ULP
  • , Valérie LecheneAffiliated withIFSWadham College
  • , Nicolas MoreauAffiliated withGREMAQ and LIRHE
    • , Michal MyckAffiliated withIFSDIW
    • , Javier Ruiz-CastilloAffiliated withUniversidad Carlos III
    • , Frederic VermeulenAffiliated withTilburg University

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Abstract

A widely shared intuition holds that individual control over money matters for the decision process within the household and the subsequent distribution of resources and welfare. As a consequence, there are good reasons to depart from the unitary model of the household and to explore the possibilities offered by models of the family accounting for several decision makers in the household and for the potential impact of tax reforms on the balance of power. This paper summarizes both the methodological and empirical findings presented in the next three papers of this special issue of the Review of the Economics of the Household. This series of contributions primarily entails a concrete comparison of the policy implications of the choice between the unitary and a particular multi-person representation: the collective representation. On the one hand, it suggests a methodology to implement the collective model of labor supply in a realistic context where participation is modeled together with working hours, and where the full tax-benefit system is accounted for. On the other hand, the empirical part relies on comprehensive simulations of tax reforms in Belgium, France, Germany, Italy, Spain, and the United Kingdom, and allows to quantify the distortions that may affect policy recommendations based on the unitary model.

Keywords

Collective model Household labor supply Intra household allocations Tax reform

JEL Classification

D11 D12 J22