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Family Intertemporal Fiscal Incidence: A new Methodology for Assessing Public Policies

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  • Polin, Veronica
  • Sartor, Nicola

Abstract

A correct assessment of public policies requires the analysis of deliberate and involuntary redistribution. Redistributive policies have an interpersonal as well as an intrapersonal dimension. To assess the latter, the entire lifetime of individuals and families has to be taken into consideration. Traditionally, redistribution is analysed with static tax-benefit microsimulation models or on stylised individuals/households. Such tools are inadequate to estimate intrapersonal redistribution. The paper proposes a new methodology for evaluating the lifetime incidence of budgetary policy on families. To do so, the definition of a “family unit” proposed by Ermish and Overton (1985) is used. By explicitly considering jointly all tax and spending programs, including in kind transfers and the supply of public services, the new methodology allows to estimate the overall redistribution of the public budget. Moreover, this approach provides an essential tool for examining in detail how the existing tax-benefit system influences the net fiscal position of different family kinds along their lifecycle. As a first application, the new methodology is applied to Italy to investigate lifetime public support to dependants. Empirical results show that public support is not negligible, representing on average 10 percent of family expenditures. However, support is mainly geared to “old” family types - characterised by an absence of major economic problems and by low female labour market participation. The second part of the research explores the hypothesis that the current low demographic scenario can be characterised by “demographic free-riding”. Conclusions are such that the free-riding hypothesis is accepted. However, the scenario resembles the “positive externality” case more than that of “pure public good”.

Suggested Citation

  • Polin, Veronica & Sartor, Nicola, 2009. "Family Intertemporal Fiscal Incidence: A new Methodology for Assessing Public Policies," MPRA Paper 25570, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:25570
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    References listed on IDEAS

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    Cited by:

    1. Alessandro Bucciol & Laura Cavalli & Igor Fedotenkov & Paolo Pertile & Veronica Polin & Nicola Sartor & Alessandro Sommacal, 2014. "A large scale OLG model for France, Italy and Sweden: assessing the interpersonal and intrapersonal redistributive effects of public policies," Working Papers 07/2014, University of Verona, Department of Economics.
    2. Laura Cavalli & Alessandro Bucciol & Paolo Pertile & Veronica Polin & Nicola Sartor & Alessandro Sommacal, 2012. "Modelling life-course decisions for the analysis of interpersonal and intrapersonal redistribution," Working Papers 25/2012, University of Verona, Department of Economics.

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    More about this item

    Keywords

    Lifetime fiscal incidence; Child support and fertility;

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • J18 - Labor and Demographic Economics - - Demographic Economics - - - Public Policy

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