Working Paper: CEPR ID: DP7039
Authors: Alessandra Casarico; Alessandro Sommacal
Abstract: This paper studies the effects of labour income taxation on growth in an OLG model where both formal schooling and child care enter the human capital production function as complements. We compare them with the effects obtained in a model where only formal schooling matters for skill formation. Using a numerical analysis we find that the omission of child care from the technology of skills' formation can significantly bias the results related to the effects of labour income taxation on growth.
Keywords: child care; growth; human capital; labour supply; taxation
JEL Codes: H31; J22
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Labor income taxation (H31) | Human capital accumulation (J24) |
| Labor income taxation (H31) | Time allocated to child care (J22) |
| Labor income taxation (H31) | Expenditure on child care (J13) |
| Child care inclusion in human capital production function (J24) | Estimated effects of labor income taxation on growth (H31) |
| Omission of child care from human capital production function (J24) | Underestimation of negative impacts of labor income taxation on growth (H31) |