Altruism, Labor Supply and Redistributive Neutrality
Posted: 23 Mar 2000 Last revised: 9 Jun 2008
Date Written: February 2008
This paper presents a model of familial altruism in which labor supply is chosen endogenously. The model is used to address the predictions of Ricardian Equivalence, both theoretical and empirical. It is argued that, to the extent that income variation in the data comes mostly from wage and effort changes, the empirical tests of neutrality are misspecified. Numerical estimates suggest that quantitatively important deviations from neutrality may be at work.
Keywords: Ricardian Equivalence, redistributive neutrality, altruism, endogenous labor supply, private information.
JEL Classification: D19, D64, D82, J22
Suggested Citation: Suggested Citation