Intergenerational transmission of skills during childhood and optimal public policy

Alessandra Casarico, Luca Micheletto and Alessandro Sommacal

No 2011:3, Working Paper Series, Center for Fiscal Studies from Uppsala University, Department of Economics

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.

Keywords: optimal taxation; day care quality; intergenerational transmission of skills; early childhood environment; warm-glow (search for similar items in EconPapers)
JEL-codes: H21 H23 J13 J22 J24 (search for similar items in EconPapers)
Pages: 53 pages
Date: 2011-02-04
New Economics Papers: this item is included in nep-cis, nep-cmp, nep-dge and nep-lab
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Citations: View citations in EconPapers (6)

Published as Casarico, Alessandra, Luca Micheletto and Alessandro Sommacal, 'Intergenerational transmission of skills during childhood and optimal public policy' in Journal of Population Economics , 2015, pages 353-372.

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Related works:
Journal Article: Intergenerational transmission of skills during childhood and optimal public policy (2015)
Working Paper: Intergenerational Transmission of Skills during Childhood and Optimal Public Policy (2011)
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