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Family Intertemporal Fiscal Incidence: A new Methodology for Assessing Public Policies


  • Polin, Veronica
  • Sartor, Nicola


A correct assessment of public policies requires the analysis of deliberate and involuntary redistribution. Redistributive policies have an interpersonal as well as an intrapersonal dimension. To assess the latter, the entire lifetime of individuals and families has to be taken into consideration. Traditionally, redistribution is analysed with static tax-benefit microsimulation models or on stylised individuals/households. Such tools are inadequate to estimate intrapersonal redistribution. The paper proposes a new methodology for evaluating the lifetime incidence of budgetary policy on families. To do so, the definition of a “family unit” proposed by Ermish and Overton (1985) is used. By explicitly considering jointly all tax and spending programs, including in kind transfers and the supply of public services, the new methodology allows to estimate the overall redistribution of the public budget. Moreover, this approach provides an essential tool for examining in detail how the existing tax-benefit system influences the net fiscal position of different family kinds along their lifecycle. As a first application, the new methodology is applied to Italy to investigate lifetime public support to dependants. Empirical results show that public support is not negligible, representing on average 10 percent of family expenditures. However, support is mainly geared to “old” family types - characterised by an absence of major economic problems and by low female labour market participation. The second part of the research explores the hypothesis that the current low demographic scenario can be characterised by “demographic free-riding”. Conclusions are such that the free-riding hypothesis is accepted. However, the scenario resembles the “positive externality” case more than that of “pure public good”.

Suggested Citation

  • Polin, Veronica & Sartor, Nicola, 2009. "Family Intertemporal Fiscal Incidence: A new Methodology for Assessing Public Policies," MPRA Paper 25570, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:25570

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    References listed on IDEAS

    1. François Bourguignon & Amedeo Spadaro, 2006. "Microsimulation as a tool for evaluating redistribution policies," The Journal of Economic Inequality, Springer;Society for the Study of Economic Inequality, vol. 4(1), pages 77-106, April.
    2. Immervoll, Herwig & Levy, Horacio & Lietz, Christine & Mantovani, Daniela & O'Donoghue, Cathal & Sutherland, Holly & Verbist, Gerlinde, 2005. "Household Incomes and Redistribution in the European Union: Quantifying the Equalising Properties of Taxes and Benefits," IZA Discussion Papers 1824, Institute for the Study of Labor (IZA).
    3. Alan J. Auerbach & Jagadeesh Gokhale & Laurence J. Kotlikoff, 1991. "Generational Accounts: A Meaningful Alternative to Deficit Accounting," NBER Chapters,in: Tax Policy and the Economy, Volume 5, pages 55-110 National Bureau of Economic Research, Inc.
    4. Francisco J. Gomes & Laurence J. Kotlikoff & Luis M. Viceira, 2008. "Optimal Life-Cycle Investing with Flexible Labor Supply: A Welfare Analysis of Life-Cycle Funds," American Economic Review, American Economic Association, vol. 98(2), pages 297-303, May.
    5. Nicola Sartor & Laurence J. Kotlikoff & Willi Leibfritz, 1999. "Generational Accounts for Italy," NBER Chapters,in: Generational Accounting around the World, pages 299-324 National Bureau of Economic Research, Inc.
    6. Herwig Immervoll & Henrik Jacobsen Kleven & Claus Thustrup Kreiner & Emmanuel Saez, 2007. "Welfare reform in European countries: a microsimulation analysis," Economic Journal, Royal Economic Society, vol. 117(516), pages 1-44, January.
    7. Catherine Hakim, 2003. "A New Approach to Explaining Fertility Patterns: Preference Theory," Population and Development Review, The Population Council, Inc., vol. 29(3), pages 349-374.
    8. Albert Ando & Sergio Nicoletti-Altimari, 2004. "A micro simulation model of demographic development and households' economic behavior in Italy," Temi di discussione (Economic working papers) 533, Bank of Italy, Economic Research and International Relations Area.
    9. A. Lans Bovenberg, 2008. "The Life-course Perspective and Social Policies: An Overview of the Issues," CESifo Economic Studies, CESifo, vol. 54(4), pages 593-641, December.
    10. Veronica Polin, 2004. "II costo dei figli: una stima svincolata dal benessere," Rivista Internazionale di Scienze Sociali, Vita e Pensiero, Pubblicazioni dell'Universita' Cattolica del Sacro Cuore, vol. 112(1), pages 79-108.
    11. Nicola Sartor, 2001. "The Long-run Effects of the Italian Pension Reforms," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 8(1), pages 83-111, January.
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    Cited by:

    1. Laura Cavalli & Alessandro Bucciol & Paolo Pertile & Veronica Polin & Nicola Sartor & Alessandro Sommacal, 2012. "Modelling life-course decisions for the analysis of interpersonal and intrapersonal redistribution," Working Papers 25/2012, University of Verona, Department of Economics.
    2. Alessandro Bucciol & Laura Cavalli & Igor Fedotenkov & Paolo Pertile & Veronica Polin & Nicola Sartor & Alessandro Sommacal, 2014. "A large scale OLG model for France, Italy and Sweden: assessing the interpersonal and intrapersonal redistributive effects of public policies," Working Papers 07/2014, University of Verona, Department of Economics.

    More about this item


    Lifetime fiscal incidence; Child support and fertility;

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy


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