Taxation and Parental Time Allocation under Different Assumptions on Altruism

In this paper we develop an overlapping generations model in which child care matters for human capital accumulation. We investigate whether an increase in labor supply brought about by a reduction in taxes is always associated with a reduction in parental time devoted to children, which modifies their human capital accumulation process. We show that the result critically depends on the assumptions on the altruistic motives behind the choice of devoting time to children.