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On The Optimal Fiscal Treatment Of Family Size

  • Alessandro Balestrino


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.

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Length: 18 pages
Date of creation: Jan 2001
Date of revision:
Handle: RePEc:wpc:wplist:wp04_01
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  1. Balcer, Yves & Sadka, Efraim, 1986. "Equivalence scales, horizontal equity and optimal taxation under utilitarianism," Journal of Public Economics, Elsevier, vol. 29(1), pages 79-97, February.
  2. Willis, Robert J, 1973. "A New Approach to the Economic Theory of Fertility Behavior," Journal of Political Economy, University of Chicago Press, vol. 81(2), pages S14-64, Part II, .
  3. Apps, P.F. & Rees, R., 1998. "On the Taxation of Trade Within and Between Households," Papers 337, Australian National University - Department of Economics.
  4. Cigno, Alessandro, 1983. "Corrigendum [On Optimal Family Allowances]," Oxford Economic Papers, Oxford University Press, vol. 35(2), pages 329, July.
  5. Dasgupta, Partha, 2000. "Reproductive externalities and fertility behaviour," European Economic Review, Elsevier, vol. 44(4-6), pages 619-644, May.
  6. Henrik Jacobsen Kleven, . "Optimum Taxation and the Allocation of Time," EPRU Working Paper Series 00-16, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
  7. Sandmo, Agnar, 1990. "Tax Distortions and Household Production," Oxford Economic Papers, Oxford University Press, vol. 42(1), pages 78-90, January.
  8. 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.
  9. 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.
  10. Cigno, Alessandro, 1983. "On Optimal Family Allowances," Oxford Economic Papers, Oxford University Press, vol. 35(1), pages 13-22, March.
  11. Batina, Raymond G., 1987. "The consumption tax in the presence of altruistic cash and human capital bequests with endogenous fertility decisions," Journal of Public Economics, Elsevier, vol. 34(3), pages 329-354, December.
  12. Myles,Gareth D., 1995. "Public Economics," Cambridge Books, Cambridge University Press, number 9780521497695, October.
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