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Intergenerational transmission of skills during childhood and optimal public policy

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  • Alessandra Casarico
  • Luca Micheletto
  • Alessandro Sommacal

Abstract

We characterize the optimal tax policy and quality of day care services in an OLG model in which child care arrangements chosen by parents of different skill types affect the probability that children become high-skilled adults in a type-specific way. With respect to previous contributions, optimal tax formulas incorporate type-specific Pigouvian terms which correct for the intergenerational externality in human capital accumulation. The optimal quality of day care services is determined by equating the total private marginal benefits of a quality increase to its marginal cost, adjusted for the presence of three additional terms capturing respectively the budgetary impact of a change in demand for day care services, the intergenerational externality in human capital accumulation, and the self-selection constraint. Copyright Springer-Verlag Berlin Heidelberg 2015

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  • Alessandra Casarico & Luca Micheletto & Alessandro Sommacal, 2015. "Intergenerational transmission of skills during childhood and optimal public policy," Journal of Population Economics, Springer;European Society for Population Economics, vol. 28(2), pages 353-372, April.
    • Handle: RePEc:spr:jopoec:v:28:y:2015:i:2:p:353-372
    DOI: 10.1007/s00148-014-0505-0
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    Cited by:

    1. Spencer Bastani & Sören Blomquist & Luca Micheletto, 2020. "Pareto efficient income taxation without single-crossing," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 55(3), pages 547-594, October.
    2. Barigozzi, Francesca & Cremer, Helmuth & Roeder, Kerstin, 2020. "Having it all, for all: Child-care subsidies and income distribution reconciled," Journal of Economic Behavior & Organization, Elsevier, vol. 176(C), pages 188-211.
    3. Alessandra Casarico & Luca Micheletto & Alessandro Sommacal, 2015. "Intergenerational transmission of skills during childhood and optimal public policy," Journal of Population Economics, Springer;European Society for Population Economics, vol. 28(2), pages 353-372, April.
    4. Alessandra Casarico & Alessandro Sommacal, 2018. "Taxation and parental time allocation under different assumptions on altruism," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 25(1), pages 140-165, February.
    5. Alessandra Casarico & Elena Del Rey & Jose I. Silva, 2023. "Child care costs, household liquidity constraints, and gender inequality," Journal of Population Economics, Springer;European Society for Population Economics, vol. 36(3), pages 1461-1487, July.
    6. Marcenaro-Gutierrez, O.D. & Lopez-Agudo, L.A. & Henriques, C.O., 2021. "Are soft skills conditioned by conflicting factors? A multiobjective programming approach to explore the trade-offs," Economic Analysis and Policy, Elsevier, vol. 72(C), pages 18-40.
    7. Francesca Carta, 2013. "Investing in the youngest: the optimal child care policy," Questioni di Economia e Finanza (Occasional Papers) 180, Bank of Italy, Economic Research and International Relations Area.

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    More about this item

    Keywords

    Optimal taxation; Day care quality; Intergenerational transmission of skills; Early childhood environment; Warm glow; H21; J22; J24;
    All these keywords.

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth
    • J22 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Time Allocation and Labor Supply
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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