Labor Income Taxation, Human Capital, and Growth: The Role of Childcare

This paper examines the effects of labor income taxation on growth in an overlapping generations model in which schooling and child care play a role in the production of human capital. We compare such effects with those obtained in a model in which only schooling matters for skill formation. We show that the omission of child care from the technology of skill formation can bias the results related to the impact of labor income taxation on growth.