Relational contracts, taxation and the household

Arbeitspapier

This paper applies the theory of relational contracts to make precise the idea that because households are engaged in a repeated non-cooperative game, Pareto efficient outcomes can be supported by self interest, given the specific pattern of specialisation and exchange which exists in the household. The household's choice of a particular solution from the resulting feasible set is found by the maximisation of a household welfare function, a generalisation of a suggestion originally made by Samuelson. This nests as special cases the objective functions used in currently popular models of households engaged in one-shot cooperative games. We take a specific example of such a household welfare function, characterise the determinants of the household utility distribution, and then apply the model to examine the effects of a move from joint to individual taxation. We show that on standard stylised facts, secondary earners are always better off absolutely, and define the conditions under which they will also be so relatively. This confirms the conclusions from models which concern themselves only with the across-household welfare distribution.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: IZA Discussion Papers ; No. 4189

Classification and Topics

• Classification: Wirtschaft ; Consumer Economics: Theory ; Household Production and Intrahousehold Allocation ; Taxation and Subsidies: Efficiency; Optimal Taxation ; Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes ; Fiscal Policies and Behavior of Economic Agents: Household ; Marriage; Marital Dissolution; Family Structure; Domestic Abuse ; Economics of Gender; Non-labor Discrimination ; Family and Personal Law ; Economic History: Labor and Consumers, Demography, Education, Health, Welfare, Income, Wealth, Religion, and Philanthropy: General, International, or Comparative
• Subject: Relational contracts ; households ; allocations ; taxation ; welfare distribution ; Haushaltsökonomik ; Verhandlungstheorie ; Steuer ; Unvollständiger Vertrag ; Familienbesteuerung ; Steuerwirkung ; Wohlfahrtseffekt ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Apps, Patricia ; Rees, Ray
• Event: Veröffentlichung
• (who): Institute for the Study of Labor (IZA)
• (where): Bonn
• (when): 2009

Further information

• Handle: http://hdl.handle.net/10419/35713
• URN: urn:nbn:de:101:1-20090612132
• Last update: 10.03.2025, 11:45 AM CET