Suchergebnisse

We study child care subsidies in a Mirrleesian optimal tax framework where parents choose both the quantity and quality of child care. Child care services not only enable parents to work, but also contribute to children's human capital. We examine the conditions under which child care expenditures should be encouraged or discouraged by the tax system under different assumptions regarding the available policy instruments. Using a quantitative model calibrated to the US economy, we illustrate the possibility that child care expenditures should be taxed rather than subsidized, and we discuss the merits of public provision schemes for child care.

We provide a full characterization of a two-type optimal nonlinear income tax model where the single-crossing condition is violated due to an assumption that agents differ both in terms of market abilities and in terms of their needs for a work-related good. We set up a Pareto-efficient tax problem and analyze the entire second-best Pareto-frontier, highlighting several non-standard results, such as the possibility of income re-ranking relative to the laissez-faire and gaps in the Pareto-frontier.

We investigate how the social welfare gain of subsidizing work-related goods depends on whether the underlying income tax system is linear, piecewise linear or fully nonlinear, focusing on child care services as a paradigmatic example of goods/services that are complements with labor supply. Our quantitative analysis employs an empirically relevant labor supply model and shows that the welfare gain of an optimally chosen subsidy is negligible when the optimal income tax is restricted to be linear but about the same as under fully nonlinear taxation when the optimal income tax is restricted to be piecewise linear. Our findings enhance the policy relevance of the optimal tax argument in favor of providing subsidies to work-related goods and also shed light on the relative welfare gains of employing piecewise linear rather than fully nonlinear income taxes.

A major factor that contributes to persistent gender variation in labor market outcomes is women's traditional role in the household. Child-related absences from work imply that women accumulate less job experience, are more prone to career discontinuities and, hence, suffer a motherhood penalty. We highlight how the gender-driven career/family segmentation of the labor market may create a normative justification for parental leave rules as a means to enhance efficiency in the labor market and alleviate the gender wage gap.