S-WoPEc
 
Scandinavian Working Papers in Economics
HomeAboutSeriesSubject/JEL codesAdvanced Search
Institutet för Framtidsstudier - Institute for Futures Studies Arbetsrapport, Institutet för Framtidsstudier - Institute for Futures Studies

No 2004:6:
Welfare Enhancing Marginal Tax Rates: The Case of Publicly Provided Day Care

Sören Blomquist and Vidar Christiansen ()

Abstract: There is a well established case for public provision of certain private goods when the government pursues income redistribution under asymmetric information about the skill levels of the agents of the economy. This paper higlights the role of tax funding of day care for children, which is a striking example of a valid case for public provision. We demonstrate that the optimal income tax should face alla agents with the (social) cost of the day care they need in order to earn futher income. In this sense day care should not be subsidised. It is simply paid for via the tax bill. However, such a payment scheme, rather than a day care fee, is crucial for alleviating the self-selection constraint of the asymmetric information, non-linear income tax model, as it imposes a burden of paying for superfluous day care on a mimicking high-skilled agent. Also, deviating from conventional preference assumptions, we show that heterogeneity of preferences for work and day care does not invalidate the Pareto improving properties of this kind of public provision.

Keywords: Day care; Marginal income tax; Public provision; Private goods; In-kind transfer; Heterogeneous preferences; (follow links to similar papers)

JEL-Codes: H21; H42; I38; (follow links to similar papers)

23 pages, September 2004

ISSN 1652-120X ISBN 91-89655-55-9

Before downloading any of the electronic versions below you should read our statement on copyright.
Download GhostScript for viewing Postscript files and the Acrobat Reader for viewing and printing pdf files.

Full text versions of the paper:

20051201134225filIQyrIFj4qUW7Y8078g44.pdf    PDF-file
Download Statistics

Questions (including download problems) about the papers in this series should be directed to Erika Karlsson ()
Report other problems with accessing this service to Sune Karlsson () or Helena Lundin ().

Programing by
Design by Joachim Ekebom

Handle: RePEc:hhs:ifswps:2004_006 This page was generated on 2016-04-14 21:03:07