Income Tax Design and the Desirability of Subsidies to Secondary Workers in a Household Model with Joint and Non-Joint Time

15 Pages Posted: 16 Oct 2007 Last revised: 16 Apr 2008

See all articles by Edgar Cudmore

Edgar Cudmore

University of Western Ontario - Department of Economics

John Piggott

University of New South Wales (UNSW) - Australian School of Business, School of Economics

John Whalley

University of Western Ontario - Department of Economics; National Bureau of Economic Research (NBER); CESifo (Center for Economic Studies and Ifo Institute); Centre for International Governance and Innovation (CIGI)

Date Written: October 2007

Abstract

In this paper we analyze income tax design in a two member household labor supply model where time spent on consumption together by the two household members is valued differently from time spent apart. We treat consumption as a non excludable public good to members of the household; one example would be where all household members or one alone can watch TV. When jointly consumed, however, TV services are valued more highly than the same consumption undertaken separately. We use this model to numerically investigate the welfare implications of different tax structures. In sharp contrast to existing literature, our results suggest the desirability of subsidizing secondary worker's labor supply. We also relate our discussion to existing individual-household tax unit literature.

Suggested Citation

Cudmore, Edgar and Piggott, John and Whalley, John, Income Tax Design and the Desirability of Subsidies to Secondary Workers in a Household Model with Joint and Non-Joint Time (October 2007). NBER Working Paper No. w13503. Available at SSRN: https://ssrn.com/abstract=1021981

Edgar Cudmore

University of Western Ontario - Department of Economics ( email )

London, Ontario N6A 5B8
Canada

John Piggott

University of New South Wales (UNSW) - Australian School of Business, School of Economics ( email )

High Street
Sydney, NSW 2052
Australia

John Whalley (Contact Author)

University of Western Ontario - Department of Economics ( email )

London, Ontario N6A 5B8
Canada
519-661-3509, ext. 83509 (Phone)
519-661-3666 (Fax)

HOME PAGE: http://www.ssc.uwo.ca/economics/faculty/

National Bureau of Economic Research (NBER)

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Cambridge, MA 02138
United States

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.CESifo.de

Centre for International Governance and Innovation (CIGI) ( email )

57 Erb Street West
Waterloo, Ontario N2L 6C2
Canada

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