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Optimal income taxation of lone mothers: An empirical comparison of the UK and Germany

Blundell, R and Brewer, M and Haan, P and Shephard, A (2009) 'Optimal income taxation of lone mothers: An empirical comparison of the UK and Germany.' Economic Journal, 119 (535). ISSN 0013-0133

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Optimal tax rules are used to evaluate the optimality of taxation for lone mothers in Germany and Britain. The theoretical model is combined with elasticities derived from the structural estimation of lone mothers' labour supply. For both countries we do not find that in-work credits with marginal tax rates are optimal. However we show that when the government has a low taste for redistribution, out-of-work transfers and transfer for the working poor are very similar, implying very low marginal tax rates. Further, the current tax and transfer systems in both countries are shown to be optimal only if governments have a much higher welfare value for income received by the non-workers than the working poor. © Journal compilation © 2009 by the Royal Economic Society (Registered Charity No. 231508).

Item Type: Article
Subjects: H Social Sciences > HJ Public Finance
H Social Sciences > HQ The family. Marriage. Women
Divisions: Faculty of Social Sciences > Institute for Social and Economic Research
Depositing User: Jim Jamieson
Date Deposited: 16 Jul 2013 13:36
Last Modified: 30 Jan 2019 16:23

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