Should a benevolent social planner subsidise family size? Typically, contributions assuming exogenous fertility yield an a¢rmative answer, while those assuming endogenous fertility do not reach de…nite conclusions. We re-examine the endogenous fertility model, and …nd that when redistribution is accomplished mostly using non-income taxes, there is indeed a case for subsidising the number of children, as long as poor families tend to have more children. Instead, when redistribution is pursued prevalently using a non-linear income tax, the above rationale for children subsidisation disappears. We …nally argue that whether children are a tax asset or a tax liability depends however on all the policy instruments, and not only on the tax treatment of family size.
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Paper provided by CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY in its series CHILD Working Papers with number
wp04_01.
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
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