What's the Use of Marriage?

We use elementary game-theoretical concepts to compare domestic equilibria with and without marriage. In particular, we examine the effects of marriage legislation, matrimonial property regime, and divorce court sentencing practice, on the decision to marry, and on the choice of game conditional on marriage. We find that, in the absence of social stigma or legal discrimination against unmarried couples, a couple will marry only if marriage serves as a commitment device which facilitates cooperation.gender, cohabitation, marriage, divorce, alimony, matrimonial property, fertility, division of labour

How to Deal with Covert Child Labour, and Give Children an Effective Education, in a Poor Developing Country : An Optimal Taxation Problem with Moral Hazard

As the return to education (and possibly also parental income) is uncertain, and given that the work a child does covertly for his own parents, and transfers between parents and children, are private information, the government should make school enrollment compulsory, set a legal limit (decreasing in parental income) on overt child labour, and redistribute across families using a flat-rate education grant, and a tax on parental income. That done, it should use a scholarship increasing in school results, and a tax on the skill premium, to raise the expected return to educational investment, and make it less uncertain.child labour, education, uncertainty, moral hazard

The Political Economy of Intergenerational Cooperation

The paper examines the scope for mutually beneficial intergenerational cooperation, and looks at various attempts to theoretically explain the emergence of norms and institutions that facilitate this cooperation. After establishing a normative framework, we examine the properties of the laissez-faire solution in a pure market economy, and in one where reproductive decisions and intergenerational transfers are governed by self-enforcing family constitutions. We then show that first and second-best policies include a pension and a child benefit scheme. Finally, we look at the possibility that intergenerational redistribution might be supported by either a constitution, or some kind of voting equilibrium.intergenerational cooperation, family, fertility, saving, private transfers, education, child benefits, pensions, self-enforcing constitutions, direct democracy, representative democracy, constitutions

How to Avoid a Pension Crisis: A Question of Intelligent System Design

Conventional pension systems suffer from a design defect which makes them financially unsustainable, and a source of inefficiency for the economy as a whole. The paper outlines a second-best policy which includes a public pension system made up of two parallel schemes, a Bismarckian one allowing individuals to qualify for a pension by working and paying contributions in the usual way, and an unconventional one allowing them to qualify for a pension by having children, and investing time and money in their upbringing.pension reform, implicit pension taxes and subsidies, child benefits, fertility, labour productivity

How to Deal with Covert Child Labour, and Give Children an Effective Education, in a Poor Developing Country: An Optimal Taxation Problem with Moral Hazard

Given that credit and insurance markets are imperfect, and given also that intra-household transfers, and much of the work a child does, are private information, the second-best policy uses a combination of need and merit based education awards, together with a mix of taxes on parental income, and on the return to educational investment. It also makes school enrollment compulsory and, if the child wage rate is sufficiently high, sets a ceiling, decreasing in parental income, on overt child labour.child labour, education, uncertainty, moral hazard

Is there a Social Security Tax Wedge?

A Beveridgean pension scheme invariably reduces the marginal return to labour, and will thus discourage labour. A Bismarckian scheme can do so only if it is not actuarially fair, or in the presence of credit rationing. In any case, the same pension contribution will discourage labour less if the scheme is Bismarckian than if it is Beveridgean. A Bismarckian scheme may even encourage labour.tax wedge, labour, public pensions, Bismarck, Beveridge, implicit pension tax

How to Deal with Covert Child Labour, and Give Children an Effective Education, in a Poor Developing Country

As credit and insurance markets are imperfect, and given that intra-family transfers, and the way a child uses her time outside school hours, are private information, the second-best policy makes school enrollment compulsory, forces overt child labour below its efficient level (if positive), and uses a combination of need and merit based grants, financed by earmarked taxes, to relax credit constraints, redistribute and insure. Existing conditional cash transfer schemes can be made to approximate the second-best policy by incorporating these principles in some measure.education, child labour, uncertainty, moral hazard, optimal taxation

The Economics of Marriage

In a separate-property jurisdiction, marriage may induce domestic cooperation, and enhance efficiency in the production of children, because it may lend credibility to the prospective main earner's promise to compensate the main childcarer when the children will no longer be economically dependent on them. In a community-property jurisdiction, marriage will induce domestic cooperation, and enhance efficiency in the production of children, because it rules out strategic behaviour. Whatever the matrimonial property regime, reducing the cost or difficulty of obtaining a divorce will have no permanent effect on the divorce rate. In a separate-property jurisdiction, it will encourage marriage, and induce more married women to specialize in market work. Couples should be allowed to choose the matrimonial property regime.divorce, alimony, matrimonial property, commitment, fertility, domestic division of labour

Agency in Family Policy: A Survey

Given that young children are under the control of their parents, if the government has an interest in either the welfare or the productivity of the former, it has no option but to act through the latter. Parents are, in the ordinary sense of the word, the government’s agents. They are agents also in the sense of Principal-Agent theory if the parental action of concern to the government is private information. This throws doubt on some established optimal-taxation results, and gives rise to some new ones.optimal taxation, optimal family allowances, hidden ability to raise children, hidden educational investments, endogenous and exogenous fertility