Research

The Collective Household, Household Production, and Efficiency of Marginal Reforms

Most research on the welfare properties of taxes employs the unitary model of the household, ignoring household production. A simple model provides expressions for the changes in individual utility given marginal reforms to government policy. It is shown that the burden of a higher tax on household goods falls on the household member that consumes more than they produce or purchase. Numerical calculations show that price substitution (complementarity) between home and market labor increases (decreases) aggregate efficiency costs of a marginal redistribution of income without impacting the intra-household distribution of utility changes. Modeling household goods as public versus private can alter the distributional consequences of marginal reforms.

http://onlinelibrary.wiley.com/doi/10.1111/j.1467-9779.2009.01428.x/abstract

Publication Information
Article Title: The Collective Household, Household Production, and Efficiency of Marginal Reforms
Journal: Journal of Public Economic Theory (Oct, 2009)
11(5), 749-771
Author(s): Allgood, Sam
Researcher Information
    
Allgood, Sam
Allgood, Sam
Edwin J. Faulkner Professor of Economics
Expertise:
  • Economic Education
  • Labor Economics (wages, employment, working conditions, unions)
  • Microeconomics
Economics
CoB 525 V
P.O. Box 880489
University of Nebraska-Lincoln
Lincoln, NE 68588-0489, USA
Phone: (402) 472-3367
Fax: (402) 472-9700
sallgood1@unl.edu