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Optimal Child-Related Transfers and Personal Income Tax with Endogenous Fertility

Author

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  • Andras Simonovits

    (Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences also Mathematical Institute of Budapest University of Technology and Department of Economics of CEU)

Abstract

To compare the systems of child benefits and of family tax deductions, we create a model with endogenous fertility and basic income, also financed from proportional wage taxes. Pensioners are neglected but younger and older workers are distinguished: the former raise children and receive child benefits, while the latter not. In such a model, the current average fertility depends on past average fertility, making the model dynamic. In our preferred parameter set, the deduction's efficiency is presumably lower than the benefit's and may even be lower than that of pure basic income.

Suggested Citation

  • Andras Simonovits, 2015. "Optimal Child-Related Transfers and Personal Income Tax with Endogenous Fertility," CERS-IE WORKING PAPERS 1524, Institute of Economics, Centre for Economic and Regional Studies.
    • Handle: RePEc:has:discpr:1524
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    References listed on IDEAS

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    More about this item

    Keywords

    progressive income tax; child benefits; family tax deductions; endogenous fertility;
    All these keywords.

    JEL classification:

    • J13 - Labor and Demographic Economics - - Demographic Economics - - - Fertility; Family Planning; Child Care; Children; Youth

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