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Abstract:
There is no empirical evidence that trade exposure per se increases child labour. As trade theory and household economics lead us to expect, the cross-country evidence seems to indicate that trade reduces or, at worst, has no significant effect on child labour. Consistently with the theory, a comparatively well educated labour force, and active social policies, appear to be conducive to a reduction in child labour. For countries with a largely uneducated workforce, the problem is not so much globalisation, as being allowed to take part in it.

Child Labour, Globalisation, Education, Health, Skill Premium, Trade

Abstract:
Student loans, even income-contingent ones, are not optimal. Potential university students with the appropriate characteristics should be offered a scholarship, dependent on both need and merit. The award of the scholarship should be conditional on the choice of university degree, but students with a natural aptitude for studies that do not hold the prospect of a well paid job should not be pushed towards potentially more lucrative ones. The scheme should be financed by a graduate tax that re-distributes from the better paid to the academically more successful.
Principal-Agent, Moral Hazard

Scholarships, Student Loans, Graduate Tax,

Abstract:
The causes and consequences of child labour are examined theoretically and empirically within a household decision framework, with endogenous fertility and mortality. The data come from a nationally representative survey of Indian rural households. The complex interactions uncovered by the analysis suggest that mere prohibition of child labour, or the imposition of school attendance, could make things worse, and would be difficult to enforce. Beneficially reducing child labour requires changing the economic environment to which the work of the children constitutes, in the great majority of the cases, the rational response. Suitable policies include reductions in the cost of attending school, and public health improvements. The effects of these policies go far beyond direct impacts. Health policies have favourable indirect repercussions on the school attendance, demand for educational material, and labour participation of children. Educational policies have favourable indirect repercussions on the nutritional status of children. Both types of policies discourage fertility. Income redistribution may be helpful, but land redistribution could be counterproductive.

Abstract:
Estimating saving and fertility simultaneously by the VAR method, we find that social security cover has a positive effect on household saving, and a negative effect on fertility. In Germany, as in other countries where the hypothesis was tested, social security is thus good for growth. A possible explanation for this unconventional finding is that compulsory saving in the form of pension contributions tends to displace intra-family transfers, rather than asset formation. However, the negative effect of social security on fertility tends to erode the system's own contributory base, because it reduces the number of future contributors. That is one of the reasons why, in Germany as elsewhere, pay-as-you-go pension systems tend to be financially unstable. To some extent, this is counteracted by child-related benefits, which tend to encourage fertility, but the effect appears to be weak.

Abstract:
The paper develops a theoretical framework, and a diagrammatic apparatus, for explaining the supply of child labour. It examines the effect of credit, insurance, and poverty (defined as more than just low income). It also explains bonded child labour, a modern form of slavery closely associated with the worst forms of child exploitation. The analysis is positive, but provides some of the elements for a normative judgement.

child labour, bonded labour, education, health, credit, insurance, poverty

Abstract:
The paper aims to ascertain whether voluntary money transfers may be explained by the existence of self-enforcing family constitutions. We identify a circumstance in which an agent will behave differently if she is optimizing subject to a family constitution, than if she is moved by either altruistic or exchange motivations. The circumstance is the presence of a binding credit ration, which may raise the probability of making a money transfer (and the amount of money transferred) if a family constitution exists, but will have the opposite effect if the transfer is either a gift, or payments for services rendered. Allowing for possible endogeneity, we find that rationing has a positive effect on the probability of giving money, and on the amount given, if the potential giver is under the age of retirement and has children, but no significant effect if the person has no children, or is over the retirement age. This rejects the hypothesis that money transfers are motivated by either altruistic or straight exchange motives, but not the one that these transfers are governed by family constitutions.

family constitution, altruism, exchange, private transfers, personal services

Abstract:
A Beveridgean pension scheme invariably introduces a wedge between the wage rate and the marginal take-home pay. A Bismarckian one can do so only if it is not actuarially fair, or in the presence of credit rationing. Interestingly, if the two possible sources of distortion are present at the same time, they will tend to offset each other. The distortion may even change sign (the wedge may become a premium). In any case, the same pension contribution will discourage labour less if the scheme is Bismarckian, than if it is Beveridgean.

tax wedge, Bismarck, Beveridge, public pensions, implicit pension tax, labour

Abstract:
Conventional pension systems suffer from a design defect which makes them financially unsustainable, and a source of inefficiency for the economy as a whole. The paper outlines a second-best policy which includes a public pension system made up of two parallel schemes, a Bismarckian one allowing individuals to qualify for a pension by working and paying contributions in the usual way, and an unconventional one allowing them to qualify for a pension by having children, and investing time and money in their upbringing.

pension reform, implicit pension taxes and subsidies, child benefits, fertility, labour productivity

Abstract:
The relationship between government and parents is modelled as a principal-agent problem, with the former in the role of principal and the latter in the role of agents. We make three major points. The first is that, if the well-being of the child depends not only on luck, but also on parental actions that the government cannot readily observe, the latter can influence parental behaviour indirectly, by conditioning transfers on performance. The second point is that, if there are market inputs into the making of a happy or successful child, which the government can observe, but cannot ascribe to any particular parent or child because they are bought anonymously, an income transfer policy can be usefully complemented by an indirect tax policy that systematically distorts prices in favour of these inputs. The third is that, if parents care about their children, insurance and incentive considerations must be tempered by the need to compensate parents who have the misfortune of getting a child with low ability or, more generally, less well equipped to make the most of life. Ways of making these findings operative are discussed in some detail.

Abstract:
Decisions concerning marriage, fertility, participation, and the education of children are explained using a two-stage game-theoretical model. The paper examines the effects of (i) family law (cost of obtaining a divorce, alimony, availability of quasi-marriages such as PACS in France, and civil partnership in the UK), (ii) legislation concerning the assignment of property rights over total goods and assets acquired within marriage, (iii) enforceability of bride-price contracts, and (iv) length and effective enforcement of compulsory education. The predictions are consistent with two empirical observations. One is that, the tendency in developed countries is towards mother and father sharing market work and the care of the children equally between them, while the predominant pattern in developing countries is for the father to specialize in market work leaving the care of the children to the mother. The other is that the sign of the cross-country correlation between fertility and female labour market participation, negative until the mid-1970s, has turned positive where developed, but not developing countries are concerned since that date. The model provides a gender-neutral explanation of why girls in developing countries tend to get less education than boys of the same educational ability, and of why a substantial minority of women in some developed countries work and earn more than their male partners. We also derive and discuss the implications of a number of normative propositions.

gender, education, labour participation, fertility, civil partnership, marriage, divorce, alimony, dowry, bride-price, school-leaving age

Abstract:
How are optimal taxation rules affected when households differ in their non-market, as well as in their market skills? Where income taxation is concerned, the policy prescription applying in the case where households are differentiated only by wage rate (namely, that high-wage households should be taxed more than low-wage households, but that marginal income tax rate on the former should be zero) may be reversed when there are also differences in household production skills. Such a reversal is not very likely, however, because there are efficiency gains in subsidizing households with a comparative advantage in non-market activities. Indeed, simulations with a wide range of parameter values show that redistribution is always in favour of low-wage households, and that the amount redistributed increases with the non-market skills of the latter. If households differ in both market and non-market skills, we also find that the introduction of indirect taxation alongside income taxation my be welfare-improving, because it helps relax the incentive constraint, even when the utility function is separable in labour. This contradicts the Atkinson-Stiglitz theorem. The shift from direct to indirect taxation/subsidization allows the optimal marginal rate of income tax on potential mimickers to be different from zero. This is confirmed by simulation experiments.

Abstract:
The effects and optimal choice of policy instruments affecting the family (child benefits, taxes on child-specific commodities, etc.) are examined within the context of a household economics model with fertility choice. The simultaneous consideration of child benefits and commodity taxes in the presence of endogenous fertility yields some remarkable results. One is that, if the government can distinguish between child-specific and adult-specific commodities, it may then be optimal to tax family size and subsidize child-specific commodities. Under more restrictive conditions, it is also shown that the tax system should be so designed, that children are a net tax liability if households are differentiated for the husband's income, a net tax asset if households are differentiated for the wife's wage rate.

Endogenous Fertility, Optimal Indirect Taxation, Child-Specific Commodities, Child Benefits

Abstract:
The paper examines the scope for mutually beneficial intergenerational cooperation, and looks at various attempts to theoretically explain the emergence of norms and institutions that facilitate this cooperation. After establishing a normative framework, we examine the properties of the laissez-faire solution in a pure market economy, and in one where reproductive decisions and intergenerational transfers are governed by self-enforcing family constitutions. We then show that first and second-best policies include a pension and a child benefit scheme. Finally, we look at the possibility that intergenerational redistribution might be supported by either a constitution, or some kind of voting equilibrium.

intergenerational cooperation, family, fertility, saving, private transfers, education, child benefits, pensions, self-enforcing constitutions, direct democracy, representative democracy, constitutions

Abstract:
The paper re-examines the idea that a family can be viewed as a community governed by a self-enforcing constitution, and extends existing results in two directions. First, it identifies circumstances in which a constitution is renegotiation-proof. Second, it introduces parental altruism. The behavioural and policy implications are illustrated by showing the effects of public pensions and credit rationing. These implications are not much affected by whether altruism is assumed or not, but contrast sharply with the predictions of more conventional models.

families, self-enforcing constitutions, renegotiation-proofness, altruism, fertility, saving, transfers, attention, pensions, credit rationing

Abstract:
We examine the effects of differences in social capital on first and second best transfers to families with children, in an asymmetric information context where the number of births, and the future earning capacity of each child that is born, are random variables. The probability that a couple has children is conditional on the level of reproductive activity undertaken. The probability that a child will have high earning ability is positively conditioned not only by the level of educational investment undertaken by the child's parents, but also by the social capital of the latter. The optimal policy includes two transfers, one conditional on number of births, the other on the children's earning ability.

education, stochastic fertility, child benefits, pensions, scholarships, social capital, asymmetric information, multi-agency

Abstract:
We consider a case where some of the parents have higher ability to raise children than others. First-best policy gives both types of parents the same level of utility. If parental actions are not fully observable, however, the policy maker has to take into account the incentive-compatibility constraint that more able parents should not find it profitable to misrepresent their true ability by investing less in their children, and having a lower number of children. The second-best policy induces more able parents to have the first-best number of children, and to invest in each child at the first-best level. Less able parents are induced to have fewer children than in first best, and will underinvest in each child. Whether the government should subsidize more the more able parents, or the less able ones, depends on the properties of the cost function. In second best, however, less able parents will end up with lower utility than more able parents whatever the cost function.

Family Allowances, Parental Ability, Hidden Information, Agency Problem, Optimal Taxation

Abstract:
Decisions concerning child labour, education and nutrition are taken by parents simultaneously with decisions affecting fertility and infant mortality. This implies that child labour cannot be abolished without altering the conditions that make it optimal for parents to make their children work. Such conditions can be altered not only by educational policies, such as free or subsidized provision of school facilities, but also by more broadly aimed policies, such as sanitation or preventive medicine.

Abstract:
Given that young children are under the control of their parents, if the government has an interest in either the welfare or the productivity of the former, it has no option but to act through the latter. Parents are, in the ordinary sense of the word, the government’s agents. They are agents also in the sense of Principal-Agent theory if the parental action of concern to the government is private information. This throws doubt on some established optimal-taxation results, and gives rise to some new ones.

optimal taxation, optimal family allowances, hidden ability to raise children, hidden educational investments, endogenous and exogenous fertility

Abstract:
We use elementary game-theoretical concepts to compare domestic equilibria with and without marriage. In particular, we examine the effects of marriage legislation, matrimonial property regime, and divorce court sentencing practice, on the decision to marry, and on the choice of game conditional on marriage. We find that, in the absence of social stigma or legal discrimination against unmarried couples, a couple will marry only if marriage serves as a commitment device which facilitates cooperation.

gender, cohabitation, marriage, divorce, alimony, matrimonial property, fertility, division of labour

Abstract:
We examine the second-best family policy under the assumption that both the number and the future earning capacities of the children born to a couple are random variables with probability distributions conditional on unobservable parental actions. Potential parents take their decisions without taking into account the effects of these actions on the government's future tax revenue. The second-best policy provides parents with credit and insurance, and allows them to appropriate the external benefits of their actions.

stochastic quantity and quality of children, moral hazard, population externalities, family allowances, scholarships, pensions

Abstract:
The paper innovates on the existing optimal taxation literature by taking fertility as endogenous, and allowing for households to be differentiated by their ability to raise children, as well as by their ability to raise income. In a context where the government cannot observe personal abilities, fertility behaviour conveys a great deal of information about those characteristics, which helps to relax the self-selection constraints on re-distribution. Bi-dimentional household differentiation introduces the possibility that re-distribution will be from households with low utility to households with high utility, and that it may be optimal to accentuate or reverse the sign of laissez-faire utility inequality. Contrary to popular belief, we find that it is not necessarily optimal for the tax system to be so designed that an additional child would lighten the tax burden on his or her parents. If it is, the optimal policy may include an unusual mix of taxes on number of children, subsidies on child-specific commodities, income support for low-wage households, and positive marginal income tax rates for all.

Optimal direct and indirect taxation, endogenous fertility, comparative advantage, self-selection, child benefits

Abstract:
Children are special, not only to their own parents, but also for society at large. Even if society is not directly interested in children, intervention may still be justified for re-distributive reasons. The fact that children are not transferable, while income is, does in fact bias the first best in favour of households with a comparative advantage in raising children. Furthermore, visibility makes children a natural target of second-best policies (but it does not necessarily follow that family size should be subsidized, at least directly). If society is directly interested in children, maybe only because of an externality, that is an additional reason for interfering with parental decisions.

Comparative advantage, fertility, income and commodity taxation, child benefits, self selection, incentive compatibility