Taxing Reproduction: The Full Transfer Cost of Rearing Children in Europe

Pieter Vanhuysse*, Marton Medgyesi, Robert Ivan Gal

*Corresponding author for this work

Research output: Contribution to journalJournal articleResearchpeer-review

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Abstract

What are the intergenerational resource transfer contributions of parents and non-parents in Europe? Using National Transfer Accounts and National Time Transfer Accounts for 12 countries around 2010, we go beyond public transfers (net taxes) to also value two statistically much less visible transfers in the family realm: of market goods and of unpaid household labour (time). Non-parents contribute almost exclusively to public transfers. But parents additionally provide still larger private transfers: mothers mainly time, fathers mainly market goods. Estimating transfer stocks over the working life, the average parental/non-parental contribution ratio in Europe flips from 0.73 (public transfers alone) to 2.66 (all three transfers combined). The highest combined parental/non-parental contribution ratios are in Sweden and Finland. The metaphorical tax rates implicitly imposed thereby on rearing children in Europe are multiples of the value-added tax rates in place on consumption goods. Unveiling the sheer magnitude of these invisible transfer asymmetries carries multiple implications for policy debates. For instance, it raises the question whether ageing European societies unwittingly tax, rather than subsidise, their own reproduction. Family friendly policy models, such as the Nordic welfare states, do not mitigate this effect. They help parents work, but do not lower the implicit tax parents pay.

Original languageEnglish
Article number230759
JournalRoyal Society Open Science
Volume10
Issue number10
ISSN2054-5703
DOIs
Publication statusPublished - 11. Oct 2023

Keywords

  • public policy
  • parental investment
  • cost of children
  • human capital
  • social investment
  • equity in policy
  • social policy
  • national transfer accounts
  • societal reproduction
  • unpaid household labour
  • valuing care
  • intergenerational transfers

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