The paper characterizes the optimal tax policy and the optimal quality of day care services in a OLG model with warm-glow altruism where parental choices over child care arrangements affect the probability that the child becomes a high-skilled adult in a type-specific way. With respect to previous contributions, optimal tax formulas include type- specific Pigouvian terms which correct for the intergenerational externality in human capital accumulation. We provide a numerical example to illustrate the working of the model and the ensuing optimal public policies. We also offer a methodology to calculate the welfare loss from designing policies without taking into account the effects of parental time on the future human capital of children.

Intergenerational Transmission of skills during childhood and optimal fiscal policy

CASARICO, ALESSANDRA;
2011

Abstract

The paper characterizes the optimal tax policy and the optimal quality of day care services in a OLG model with warm-glow altruism where parental choices over child care arrangements affect the probability that the child becomes a high-skilled adult in a type-specific way. With respect to previous contributions, optimal tax formulas include type- specific Pigouvian terms which correct for the intergenerational externality in human capital accumulation. We provide a numerical example to illustrate the working of the model and the ensuing optimal public policies. We also offer a methodology to calculate the welfare loss from designing policies without taking into account the effects of parental time on the future human capital of children.
2011
Casarico, Alessandra; A., Sommacal
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11565/3744452
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