Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/204482
Authors: 
Kurnaz, Musab
Soytas, Mehmet A.
Year of Publication: 
2019
Series/Report no.: 
GLO Discussion Paper 409
Abstract: 
We study the impact of income taxation on intergenerational income correlation. We estimate a life cycle dynastic model and conduct counterfactual analysis to observe the effects of various tax regimes. Compared to a no tax environment, a flat tax regime reduces the correlation only by one percentage points. If the flat tax regime provides child benefits, the correlation additionally declines by four percentage points. Finally, if the taxes are progressive, the reduction, which is due to the increase in the fertility rate (quantity) and the decrease in the educational outcome of children (quality), is highly significant (seven percentage points).
Subjects: 
Dynastic Models
Discrete Choice
Fertility
Income Taxation
JEL: 
C13
J13
J22
J62
Document Type: 
Working Paper

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