Economics, Econometrics and Finance
4 years ago

Optimal tax policy boosts low-income children's economic mobility by 1.75%

1 view
SSRN Electronic Journal
Equalizing Outcomes vs. Equalizing Opportunities: Optimal Taxation When Children'’s Abilities Depend on Parents' ’Resources
Alexander Gelber, Matthew Weinzierl

Paper Summary

Parents' economic resources impact their children's future earnings. The study models this relationship and finds that optimal tax policy should be more redistributive towards low-income parents. This policy can increase the chances of low-income children moving up the economic ladder, leading to a significant welfare gain.

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