International Tax and Public Finance

, Volume 25, Issue 1, pp 140–165 | Cite as

Taxation and parental time allocation under different assumptions on altruism

  • Alessandra CasaricoEmail author
  • Alessandro Sommacal


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.


Early childhood environment Child care Labor supply Paternalism Full altruism 

JEL Classification

J13 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.


  1. Aguiar, M., Hurst, E., & Karabarbounis, L. (2012). Recent developments in the economics of time use. Annual Review of Economics, 4, 373–397.CrossRefGoogle Scholar
  2. 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
  3. Benhabib, J., Rogerson, R., & Wright, R. (1991). Homework in macroeconomics: Household production and aggregate fluctuations. Journal of Political Economy, 99(6), 87–1166.CrossRefGoogle Scholar
  4. Berger, T., & Heylen, F. (2011). Differences in hours worked in the OECD: Institutions or fiscal policies? Journal of Money, Credit and Banking, 43, 1333–1369.CrossRefGoogle Scholar
  5. Bernal, R., & Keane, M. (2010). Quasi-structural estimation of a model of child-care choices and child cognitive ability production. Journal of Econometrics, 156, 164–189.CrossRefGoogle Scholar
  6. Bernal, R., & Keane, M. (2011). Child care choices and children’s cognitive achievement: The case of single mothers. Journal of Labor Economics, 29, 459–512.CrossRefGoogle Scholar
  7. 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
  8. Cardia, E., & Ng, S. (2003). Intergenerational time transfers and childcare. Review of Economic Dynamics, 6, 431–454.CrossRefGoogle Scholar
  9. Casarico, A., Micheletto, L., & Sommacal, A. (2015). Intergenerational transmission of skills during childhood and optimal fiscal policies. Journal of Population Economics, 28, 353–372.CrossRefGoogle Scholar
  10. Casarico, A., & Sommacal, A. (2012). Labor income taxation, human capital, and growth: The role of childcare. Scandinavian Journal of Economics, 114, 1182–1207.CrossRefGoogle Scholar
  11. de la Croix, D., & Michel, P. (2002). A theory of economic growth: Dynamics and policy in overlapping generations. Cambridge: Cambridge University Press.Google Scholar
  12. Del Boca, D., Flinn, C., & Wiswall, M. (2014). Household choices and child development. Review of Economic Studies, 81, 137–185.Google Scholar
  13. Domeij, D., & Klein, P. (2013). Should day care be subsidized? Review of Economic Studies, 80, 568–595.CrossRefGoogle Scholar
  14. Evers, M., De Mooij, R., & Van Vuren, D. (2008). The wage elasticity of labour supply: A synthesis of empirical estimates. De Economist, 156, 25–43.CrossRefGoogle Scholar
  15. Gelber, A. M., & Mitchell, J. W. (2012). Taxes and time allocation: Evidence from single women and men. The Review of Economic Studies, 79, 863–897.CrossRefGoogle Scholar
  16. Greenwood, J., Seshadri, A., & Yorukoglu, M. (2005). Engines of liberation. Review of Economic Studies, 72(1), 109–133.CrossRefGoogle Scholar
  17. Gronau, R. (1977). Leisure, home production, and work-the theory of the allocation of time revisited. Journal of Political Economy, 85(6), 1099–1123.CrossRefGoogle Scholar
  18. Heckman, J. J., & Masterov, D. V. (2007). The productivity argument for investing in young children. Review of Agricultural Economics, 29(3), 446–493.CrossRefGoogle Scholar
  19. Heckman, J. J., & Mosso, S. (2014). The economics of human development and social mobility. Annual Review of Economics, 6(1), 689–733.CrossRefGoogle Scholar
  20. Ihori, T. (2001). Wealth taxation and economic growth. Journal of Public Economics, 79, 129–148.CrossRefGoogle Scholar
  21. 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
  22. Keane, M., & Rogerson, R. (2015). Reconciling micro and macro labor supply elasticities: A structural perspective. Annual Review of Economics, 7(1), 89–117.CrossRefGoogle Scholar
  23. King, R., & Rebelo, S. (1990). Public policy and economic growth: Developing neoclassical implications. Journal of Political Economy, 98, 519–550.CrossRefGoogle Scholar
  24. Kornstad, T., & Thoresen, T. O. (2007). A discrete choice model for labor supply and childcare. Journal of Population Economics, 20(4), 781–803.CrossRefGoogle Scholar
  25. Lundholm, M., & Ohlsson, H. (1998). Wages, taxes and publicly provided day care. Journal of Population Economics, 11, 185–204.CrossRefGoogle Scholar
  26. Meghir, C., & Phillips, D. (2008). Labour supply and taxes. Working paper No. 3405, IZAGoogle Scholar
  27. Ohanian, L., Raffo, A., & Rogerson, R. (2008). Long-term changes in labor supply and taxes: Evidence from OECD countries, 1956–2004. Journal of Monetary Economics, 55, 1353–1362.CrossRefGoogle Scholar
  28. Olivetti, C. (2006). Changes in women’s hours of market work: The role of returns to experience. Review of Economic Dynamics, 9(4), 557–587.CrossRefGoogle Scholar
  29. 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
  30. 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
  31. Rogerson, R. (2007). Taxation and market work: Is Scandinavia an outlier? Economic Theory, 32(1), 59–85.CrossRefGoogle Scholar
  32. 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
  33. Stokey, N., & Rebelo, S. (1995). Growth effects of flat-rate taxes. The Journal of Political Economy, 103, 519–550.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media New York 2017

Authors and Affiliations

  1. 1.Bocconi UniversityMilanItaly
  2. 2.Dondena Centre for Research on Social Dynamics and Public PolicyMilanItaly
  3. 3.CESIfoMunichGermany
  4. 4.University of VeronaVeronaItaly

Personalised recommendations