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Comparative Advantage, Observability, and the Optimal Tax Treatment of Families with Children

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Abstract

Children are special, not only to their own parents, but also for society at large. Even if society is not directly interested in children, intervention may still be justified for re-distributive reasons. The fact that children are not transferable, while income is, does in fact bias the first best in favour of households with a comparative advantage in raising children. Furthermore, visibility makes children a natural target of second-best policies (but it does not necessarily follow that family size should be subsidized, at least directly). If society is directly interested in children, maybe only because of an externality, that is an additional reason for interfering with parental decisions.

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Authors and Affiliations

  1. Department of Studi Sullo Stato, University of Florence, 50129, Florence, Italy

    Alessandro Cigno

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  1. Alessandro Cigno
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Cigno, A. Comparative Advantage, Observability, and the Optimal Tax Treatment of Families with Children. International Tax and Public Finance 8, 455–470 (2001). https://doi.org/10.1023/A:1011275109138

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  • DOI: https://doi.org/10.1023/A:1011275109138

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