Fiscal policy when individuals differ regarding to altruism and labor supply
This paper studies the incidence of tax-transfer policy in a growth model wherein individuals differ according to their level of intergenerational altruism and have an endogenous labor supply. The main results is that public debt is neutral at the macro level but redistributes resources from nonaltruists to altruists. Capital income taxation can hurt the nonaltruists who do not have any wealth more than the altruists who own all of it. Whether or not the altruists supply a positive amount of labor makes a big difference as to the incidence of alternative tax transfer policies.
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