Taxation and parental time allocation under different assumptions on altruism
- 265 Downloads
This paper examines the effects of labor income taxation on parental time allocation in an OLG model in which child care arrangements, that is the combination of parental and non-parental time, matter for human capital accumulation. We show that the sign of the impact of labor income taxation on parental time with children and on growth critically depends on the assumption on the altruistic motives behind the choice of devoting time to children.
KeywordsEarly childhood environment Child care Labor supply Paternalism Full altruism
JEL ClassificationJ13 J22 J24
We thank for their insightful comments the editor and two anonymous referees, as well as seminar participants at the PET conference in Lisbon, at the IIPF conference in Taormina, at the SIEP meeting in Pavia, at the University of Oslo and at the OLG days conference at the Paris School of Economics. The usual disclaimers apply. Part of the paper was written while Alessandra Casarico was visiting Oslo Fiscal Studies, which she thanks for hospitality. Alessandra Casarico acknowledges financial support from MIUR within a PRIN project. Alessandro Sommacal acknowledges financial support from MIUR within the FIRB project RBFR0873ZM 001.
- Almond, D., & Currie, J. (2011). Human capital development before age five. In O. Ashenfelter & D. Card (Eds.), Handbook of labor economics, chap 15 (Vol. 4, pp. 1315–1486). Amsterdam: Elsevier.Google Scholar
- Blomquist, S., Christiansen, V., & Micheletto, L. (2010). Public provision of private goods and nondistortionary marginal tax rates. American Economic Journal: Economic Policy, 2, 1–27.Google Scholar
- de la Croix, D., & Michel, P. (2002). A theory of economic growth: Dynamics and policy in overlapping generations. Cambridge: Cambridge University Press.Google Scholar
- Del Boca, D., Flinn, C., & Wiswall, M. (2014). Household choices and child development. Review of Economic Studies, 81, 137–185.Google Scholar
- Juster, F. (1985). A note on recent changes in time use. In F. Juster & F. Stafford (Eds.), Time, goods, and well-being. Ann Arbor: Institute for Social Research, University of Michigan.Google Scholar
- Meghir, C., & Phillips, D. (2008). Labour supply and taxes. Working paper No. 3405, IZAGoogle Scholar
- Prescott, E. (2004). Why do Americans work so much more than Europeans? Federal Reserve Bank of Minneapolis Quarterly Review, 28(1), 2–13.Google Scholar
- Ragan, K. (2013). Taxes, transfers and time use: Fiscal policy in a household production model. American Economic Journal: Macroeconomics, 5(1), 168–192.Google Scholar
- Rosen, S. (1997). Public employment, taxes, and the welfare state in Sweden. In R. B. Freeman, R. Topel, & B. Swedenborg (Eds.), The welfare state in transition: Reforming the Swedish model (pp. 79–108). University of Chicago Press.Google Scholar