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Labor Income Taxation, Human Capital and Growth: The Role of Child Care

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  • Alessandra Casarico
  • Alessandro Sommacal

Abstract

This paper studies the implications of introducing child care in the human capital production function when assessing the effects of labor income taxation on growth. We develop an OLG model where formal schooling and child care enter the human capital production function as complements and we compare it with a model where only formal schooling matters for skill formation. Using a numerical analysis we find that, depending on the quality of child care services relative to parental care, the omission of child care from the technology of skills' formation can significantly bias the results related to the effects of labor income taxation on growth.

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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 2363.

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Date of creation: 2008
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Handle: RePEc:ces:ceswps:_2363

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Keywords: taxation; growth; human capital production function; child care; labor supply;

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Citations

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Cited by:
  1. Alessandra Casarico & Alessandro Sommacal, 2014. "Taxation and Parental Time Allocation under Different Assumptions on Altruism," CESifo Working Paper Series 4690, CESifo Group Munich.
  2. repec:rdg:wpaper:em-dp2011-03 is not listed on IDEAS
  3. Marina Della Giusta & Nigar Hashimzade & Sarah Jewell, 2011. "Why Care? Social Norms, Relative Income and the Supply of Unpaid Care," Economics & Management Discussion Papers, Henley Business School, Reading University em-dp2011-03, Henley Business School, Reading University.
  4. Marina Della Giusta & Nigar Hashimzade, 2012. "Who Cares? Modelling the Care Drain," Economics & Management Discussion Papers, Henley Business School, Reading University em-dp2012-04, Henley Business School, Reading University.
  5. Alessandra Casarico & Luca Micheletto & Alessandro Sommacal, 2011. "Intergenerational Transmission of Skills during Childhood and Optimal Public Policy," CESifo Working Paper Series 3343, CESifo Group Munich.

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