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

  • Alessandro Cigno


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. Copyright Kluwer Academic Publishers 2001

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Article provided by Springer & International Institute of Public Finance in its journal International Tax and Public Finance.

Volume (Year): 8 (2001)
Issue (Month): 4 (August)
Pages: 455-470

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Handle: RePEc:kap:itaxpf:v:8:y:2001:i:4:p:455-470
DOI: 10.1023/A:1011275109138
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  1. 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.
  2. Helmuth Cremer & Arnaud Dellis & Pierre Pestieau, 2003. "Family size and optimal income taxation," Journal of Population Economics, Springer;European Society for Population Economics, vol. 16(1), pages 37-54, 02.
  3. Cigno, Alessandro, 1986. "Fertility and the Tax-Benefit System: A Reconsideration of the Theory of Family Taxation," Economic Journal, Royal Economic Society, vol. 96(384), pages 1035-51, December.
  4. Alessandro Cigno & Annalisa Luporini & Anna Pettini, 2000. "Tranfers to families with children as a principal-agent problem," CHILD Working Papers wp02_00, CHILD - Centre for Household, Income, Labour and Demographic economics - ITALY.
  5. Alessandro Balestrino & Alessandro Cigno & Anna Pettini, 2002. "Endogenous Fertility and the Design of Family Taxation," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 9(2), pages 175-193, March.
  6. Cigno, Alessandro, 1983. "On Optimal Family Allowances," Oxford Economic Papers, Oxford University Press, vol. 35(1), pages 13-22, March.
  7. Chiappori, Pierre-Andre, 1992. "Collective Labor Supply and Welfare," Journal of Political Economy, University of Chicago Press, vol. 100(3), pages 437-67, June.
  8. Robin Boadway & Michael Keen, 1999. "Redistribution," Working Papers 983, Queen's University, Department of Economics.
  9. 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.
  10. 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.
  11. 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.
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