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Fiscal Policy when Individuals Differ with Regard to Altruism and Labor Supply
Author(s) -
Michel Philippe,
Pestieau Pierre
Publication year - 1999
Publication title -
journal of public economic theory
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.809
H-Index - 32
eISSN - 1467-9779
pISSN - 1097-3923
DOI - 10.1111/1097-3923.00008
Subject(s) - economics , altruism (biology) , debt , microeconomics , capital income , fiscal policy , labour supply , labour economics , monetary economics , public economics , macroeconomics , tax reform , international taxation , psychology , social psychology
This paper studies the incidence of tax‐transfer policy in a growth model wherein individuals differ according to their level of intergenerational altruism and have an endogenous labor supply. The main result is that public debt is neutral at the macro level but redistributes resources from nonaltruists to altruists. Capital income taxation can hurt the nonaltruists who do not have any wealth more than it hurts the altruists who own all of it. Whether or not the altruists supply a positive amount of labor makes a big difference as to the incidence of alternative tax transfer policies.