Optimal Taxation: The Design of Child Related Cash- and In - Kind - Benefits

30 Pages Posted: 23 Nov 2007

See all articles by Peter Haan

Peter Haan

DIW Berlin, German Institute for Economic Research; IZA Institute of Labor Economics

Katharina Wrohlich

DIW Berlin, German Institute for Economic Research

Date Written: October 2007

Abstract

This paper contributes to the debate about the optimal design of tax - transfer systems. Based on the theory of optimal taxation, combined with microsimulation and microeconometric techniques we derive the welfare function which makes the current German tax and transfer system for single women optimal. Furthermore, we compare the welfare function conditional on the presence and age of children and asses how reforms of in-kind childcare transfers would affect the welfare function. This analysis allows us to derive conclusions about the optimal design of child related transfers and in-kind benefits.

Keywords: optimal taxation, labor supply behavior, transfers for children

JEL Classification: C23, C25, J22, J64

Suggested Citation

Haan, Peter and Wrohlich, Katharina, Optimal Taxation: The Design of Child Related Cash- and In - Kind - Benefits (October 2007). IZA Discussion Paper No. 3128. Available at SSRN: https://ssrn.com/abstract=1032107

Peter Haan

DIW Berlin, German Institute for Economic Research ( email )

Mohrenstra├če 58
Berlin, 10117
Germany

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Katharina Wrohlich (Contact Author)

DIW Berlin, German Institute for Economic Research ( email )

Mohrenstra├če 58
Berlin, 10117
Germany

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