Journal of Population Economics

, Volume 16, Issue 1, pp 37–54 | Cite as

Family size and optimal income taxation

  • Helmuth Cremer
  • Arnaud Dellis
  • Pierre Pestieau


This paper studies the role of family size in the design of optimal income taxation. We consider a second best setting where the government observes the number of children and the income of the parents but not their productivity. With a linear tax schedule the marginal tax rate is shown to decrease with the number of children, while the relationship between the demogrant and family size appears to be ambiguous. With two ability levels, optimal non-linear income tax implies zero marginal tax rates for the higher ability parents; low ability parents have positive marginal tax rates that decrease with family size.

JEL classification: J13 H21 H23 
Key words: Family size optimal taxation 


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Copyright information

© Springer-Verlag Berlin Heidelberg 2003

Authors and Affiliations

  • Helmuth Cremer
    • 1
  • Arnaud Dellis
    • 2
  • Pierre Pestieau
    • 3
  1. 1.IDEI et GREMAQ, Université de Toulouse, Allée de Brienne 21, 31000 Toulouse, France (Fax: +33-5-61128637; e-mail:
  2. 2.Department of Economics, Cornell University, Ithaca, NY607255-2818, USA (e-mail:
  3. 3.CREPP, Université de Liège, CORE and Delta, 7 Bvd du Rectorat, 4000 Liège, Belgium (+32-43663106, e-mail:

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