Labor Income Taxation, Human Capital and Growth: The Role of Child Care

CESifo Working Paper Series No. 2363

Econpubblica Working Paper No. 129

32 Pages Posted: 19 Aug 2008

See all articles by Alessandra Casarico

Alessandra Casarico

Bocconi University - Department of Policy Analysis and Public Management; CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Alessandro Sommacal

Universite Catholique de Louvain - Institut de Recherches Economiques et Sociales (IRES)

Date Written: August 2008

Abstract

This paper studies the implications of introducing child care in the human capital production function when assessing the effects of labor income taxation on growth. We develop an OLG model where formal schooling and child care enter the human capital production function as complements and we compare it with a model where only formal schooling matters for skill formation. Using a numerical analysis we find that, depending on the quality of child care services relative to parental care, the omission of child care from the technology of skills' formation can significantly bias the results related to the effects of labor income taxation on growth.

Keywords: taxation, growth, human capital production function, child care, labor supply

JEL Classification: J22, H31

Suggested Citation

Casarico, Alessandra and Sommacal, Alessandro, Labor Income Taxation, Human Capital and Growth: The Role of Child Care (August 2008). CESifo Working Paper Series No. 2363; Econpubblica Working Paper No. 129. Available at SSRN: https://ssrn.com/abstract=1237342

Alessandra Casarico (Contact Author)

Bocconi University - Department of Policy Analysis and Public Management ( email )

Via Roentgen 1
Milan, 20136
Italy

CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

Poschinger Str. 5
Munich, DE-81679
Germany

Alessandro Sommacal

Universite Catholique de Louvain - Institut de Recherches Economiques et Sociales (IRES) ( email )

3, Place Montesquieu
1348 Louvain-la-Neuve
Belgium

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