Optimal Taxation, Child Care and Models of the Household
36 Pages Posted: 5 Feb 2014
There are 2 versions of this paper
Optimal Taxation, Child Care and Models of the Household
Optimal Taxation, Child Care and Models of the Household
Date Written: January 30, 2014
Abstract
This paper presents the properties of optimal piecewise linear tax systems for two-earner households, based on joint and individual incomes respectively. A key contribution is the analysis of the interaction between second earner wage differences, variation in the price of child care and domestic productivity differences as determinants of across-household heterogeneity in second earner labor supply, and of the resulting relationship between household income and the well-being of household members. A central result is that taking account of a richer and more realistic specification of household time use widens the set of cases in which individual taxation is welfare-superior.
Keywords: optimal taxation, labour supply, time use, child care, household production, inequality
JEL Classification: H210, J220, H310, H240
Suggested Citation: Suggested Citation