Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/62431
Authors: 
Apps, Patricia
Rees, Ray
Year of Publication: 
2012
Series/Report no.: 
Discussion Paper series, Forschungsinstitut zur Zukunft der Arbeit 6823
Abstract: 
This paper presents for the first time 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 of second earner wage differences, variation in prices of bought-in inputs into household production in the form of child care, and domestic productivity differences as determinants of across-household heterogeneity in second earner labour supply. The analysis highlights the importance of the elasticity of substitution between parental and non-parental child care in determining the relationship between utility and income across households. 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 to joint taxation.
Subjects: 
optimal taxation
time allocation
household production
child care
inequality
labour supply
JEL: 
J22
H21
H24
H31
D13
Document Type: 
Working Paper

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