Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/46256
Authors: 
Casarico, Alessandra
Micheletto, Luca
Sommacal, Alessandro
Year of Publication: 
2011
Series/Report no.: 
CESifo working paper: Public Finance 3343
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. Our numerical simulations suggest that a public policy that disregards the effects of parental time on children's human capital entails a welfare loss that ranges from 0:2% to 5:7% of aggregate consumption.
Subjects: 
optimal taxation
day care quality
intergenerational transmission of skills
early childhood environment
warm-glow
JEL: 
H21
H23
J13
J22
J24
Document Type: 
Working Paper

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