Domeij, David; Klein, Paul - 2010 - First draft: March 28, 2007, This version: June 11, 2010
In an economy with distortionary taxes on labor, can subsidies on day care, financed by an increase in taxes, raise welfare by encouraging women with small children to work? We show, within a heterogeneous-agent life-cycle framework, that the Ramsey optimal policy consists in equalizing...
