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Endogenous Fertility And The Design Of Family Taxation

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Author Info
Alessandro Cigno ()
Annalisa Luporini ()
Anna Pettini ()

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Abstract

The paper innovates on the existing optimal taxation literature by taking fertility as endogenous, and allowing for households to be di¤erentiated by ability to raise children, as well as wage rates. In a context where the government cannot observe personal abilities, fertility behaviour conveys a great deal of information about those characteristics, that helps relax the self-selection constraints on the design of policy. One of the results is that, in the absence of explicit inequality aversion, re-distribution should always be in favour of low-wage households, even if the latter happen to have higher laissez-faire utility than high-wage households. Another is that children should be a tax asset to their parents only if market and domestic skills are positively correlated. Even in that case, however, the optimal policy may include an unusual mix of taxes on the number of children, subsidies on child-speci…c commodities, income support for low-wage households, and positive marginal rates of income tax for all.

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Publisher Info
Paper provided by CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY in its series CHILD Working Papers with number wp03_00.

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Length: 23 pages
Date of creation: Jun 2000
Date of revision:
Handle: RePEc:wpc:wplist:wp03_00

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Related research
Keywords: optimal; direct; indirect; taxation; endogenous; fertility; children; self-selection; taxes;

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Find related papers by JEL classification:
D13 - Microeconomics - - Household Behavior - - - Household Production and Intrahouse Allocation
H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Beaudry, Paul & Blackorby, 1997. "Taxes and employment subsidies in an optimal redistribution program," CEPREMAP Working Papers (Couverture Orange) 9709, CEPREMAP.
  2. Atkinson, A. B. & Stiglitz, J. E., 1976. "The design of tax structure: Direct versus indirect taxation," Journal of Public Economics, Elsevier, vol. 6(1-2), pages 55-75. [Downloadable!] (restricted)
  3. Beaudry, Paul & Blackorby, Charles, 2006. "Taxes and Employment Subsidies in Optimal Redistribution Programs," The Warwick Economics Research Paper Series (TWERPS) 766, University of Warwick, Department of Economics. [Downloadable!]
    Other versions:
  4. Seade, Jesus, 1982. "On the Sign of the Optimum Marginal Income Tax," Review of Economic Studies, Blackwell Publishing, vol. 49(4), pages 637-43, October. [Downloadable!] (restricted)
  5. Nerlove, Marc & Razin, Assaf & Sadka, Efraim, 1993. "Children: A Capital Good or a Base for Income Redistribution Policies," Public Finance = Finances publiques, , vol. 48(Supplemen), pages 78-84.
  6. Robin Boadway & Michael Keen, 1999. "Redistribution," Working Papers 983, Queen's University, Department of Economics. [Downloadable!]
    Other versions:
    • Boadway, Robin & Keen, Michael, 2000. "Redistribution," Handbook of Income Distribution, in: A.B. Atkinson & F. Bourguignon (ed.), Handbook of Income Distribution, edition 1, volume 1, chapter 12, pages 677-789 Elsevier. [Downloadable!] (restricted)
  7. Cigno, Alessandro & Pettini, Anna, 2002. "Taxing family size and subsidizing child-specific commodities?," Journal of Public Economics, Elsevier, vol. 84(1), pages 75-90, April. [Downloadable!] (restricted)
  8. Dan Anderberg & Alessandro Balestrino, 2000. "Household Production and the Design of the Tax Structure," International Tax and Public Finance, Springer, vol. 7(4), pages 563-584, August. [Downloadable!] (restricted)
  9. Balestrino. Allessandro & Cigno, Allessandro & Pettini, Anna, 1999. "Direct and Indirect Taxation when Households Differ in Market and Non-market Abilities," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  10. Mirrlees, James A, 1971. "An Exploration in the Theory of Optimum Income Taxation," Review of Economic Studies, Blackwell Publishing, vol. 38(114), pages 175-208, April. [Downloadable!] (restricted)
  11. Sandmo, Agnar, 1990. "Tax Distortions and Household Production," Oxford Economic Papers, Oxford University Press, vol. 42(1), pages 78-90, January. [Downloadable!] (restricted)
  12. Nava, Mario & Schroyen, Fred & Marchand, Maurice, 1996. "Optimal fiscal and public expenditure policy in a two-class economy," Journal of Public Economics, Elsevier, vol. 61(1), pages 119-137, July. [Downloadable!] (restricted)
  13. Joseph E. Stiglitz, 1982. "Self-Selection and Pareto Efficient Taxation," NBER Working Papers 0632, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  14. Cigno, Alessandro, 1983. "On Optimal Family Allowances," Oxford Economic Papers, Oxford University Press, vol. 35(1), pages 13-22, March. [Downloadable!] (restricted)
  15. Helmuth Cremer & Arnaud Dellis & Pierre Pestieau, 2003. "Family size and optimal income taxation," Journal of Population Economics, Springer, vol. 16(1), pages 37-54, 02. [Downloadable!] (restricted)
    Other versions:
  16. Myles, Gareth D., 2000. "On the optimal marginal rate of income tax," Economics Letters, Elsevier, vol. 66(1), pages 113-119, January. [Downloadable!] (restricted)
  17. Apps, Patricia & Rees, Ray, 1999. "On the taxation of trade within and between households," Journal of Public Economics, Elsevier, vol. 73(2), pages 241-263, August. [Downloadable!] (restricted)
    Other versions:
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Alessandro Cigno, 2009. "Agency in family policy: a survey," CHILD Working Papers wp16_09, CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY. [Downloadable!]
    Other versions:
  2. Jordahl, Henrik & Micheletto, Luca, 2002. "Optimal Utilitarian Taxation and Horizontal Equity," Ratio Working Papers 17, The Ratio Institute. [Downloadable!]
    Other versions:
  3. Makoto Hirazawa & Akira Yakita, 2009. "Fertility, child care outside the home, and pay-as-you-go social security," Journal of Population Economics, Springer, vol. 22(3), pages 565-583, July. [Downloadable!] (restricted)
  4. Volker Meier & Matthias Wrede, 2008. "Reducing the Excess Burden of Subsidizing the Stork: Joint Taxation, Individual Taxation, and Family Tax Splitting," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
  5. Alessandro Cigno, 2001. "Comparative Advantage, Observability, and the Optimal Tax Treatment of Families with Children," International Tax and Public Finance, Springer, vol. 8(4), pages 455-470, August. [Downloadable!] (restricted)
  6. Alessandro Balestrino, 2001. "On The Optimal Fiscal Treatment Of Family Size," CHILD Working Papers wp04_01, CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY. [Downloadable!]
    Other versions:
  7. Alessandro Cigno & Annalisa Luporini, 2009. "Optimal family policy in the presence of moral hazard, when the quantity and quality of children are stochastic," CHILD Working Papers wp13_09, CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY. [Downloadable!]
    Other versions:
  8. Herwig Immervoll & David Barber, 2006. "Can Parents Afford to Work? Childcare Costs, Tax-Benefit Policies and Work Incentives," IZA Discussion Papers 1932, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  9. Apps, Patricia & Rees, Ray, 2001. "Fertility, Female Labor Supply and Public Policy," IZA Discussion Papers 409, Institute for the Study of Labor (IZA). [Downloadable!]
  10. Alessandro Cigno & Annalisa Luporini, 2006. "Optimal Policy Towards Families with Different Amounts of Social Capital, in the Presence of Asymmetric Information and Stochastic Fertility," CESifo Working Paper Series CESifo Working Paper No. , CESifo Group Munich. [Downloadable!]
    Other versions:
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