Garstenauer, V., & Siassi, N. (2022, July 13). On the Optimal Reform of Income Support for Married Couples with Children [Conference Presentation]. 15th Viennese Conference on Optimal Control and Dynamic Games, Wien, Austria.
15th Viennese Conference on Optimal Control and Dynamic Games
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Event date:
12-Jul-2022 - 15-Jul-2022
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Event place:
Wien, Austria
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Keywords:
Income Support
en
Project title:
Zur Optimalen Gestaltung der Steuer- und Sozialpolitik für Einkommensschwache Haushalte: 18646 (Österreichische Nationalbank, Jubiläumsfonds)
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Additional information:
We characterize the optimal reform of U.S. income support for non-college educated couples with children. We develop a heterogeneous-agents model with uninsurable idiosyncratic productivity, fertility and child care risk, and incomplete asset markets. In our model, married couples evolve through a life cycle and make optimal consumption-savings and labor supply decisions. We calibrate the model using microeconomic household survey data from the Current Population Survey. Importantly, our model matches salient data moments on participation rates, the level and dispersion of hours worked, earnings, and expenditures on child care. Using our calibrated model, we then assess welfare-enhancing reforms to the current U.S. tax-transfer system. Our preliminary findings indicate that there is ample room to improve the well-being for low-income families. For instance, treating individuals instead of households as the relevant units of taxation allows the policymaker to lower participation tax rates for secondary earners and render the trade-off between guaranteed income and work incentives more favorable.
