Child-Related Transfers, Means Testing and Welfare
Authors: Darapheak Tin and Chung Tran
This paper examines efficiency equity trade-offs in child-related transfer programs with means-testing. We develop a dynamic general equilibrium life-cycle model featuring single and married households, uninsurable income and longevity risks, and endogenous female labor supply and human capital accumulation. Calibrated to Australia, where child benefits are generous but strictly means-tested, our analysis shows that replacing the current system with a universal scheme increases maternal labor supply, output, and ex-ante welfare, and receives majority support. However, this reform raises significant tax burdens that lower single mothers’ net lifetime income and welfare. Alternative reforms that reduce the generosity of the universal benefit or adjust means-testing rules lower fiscal costs and yield more equitable outcomes. In particular, the latter generates modest but broadly shared welfare gains for both parents and non-parents. These findings highlight the importance of balancing efficiency and equity in family policy design.
Political Polarization, Wage Inequality and Preferences for Redistribution
Authors: Christopher Hoy, Lionel Page, Catherine Eckel, Philip Grossman and Daniel Goldstein
Using nationally representative, randomized survey experiments, we investigate how beliefs about wage inequality impact preferences for redistribution. With more than 9,000 respondents in six high-income countries and a novel distribution builder tool, we elicit detailed beliefs about wage inequality and examine the impact of accurate information on support for redistribution. We find most respondents underestimate wage inequality and that information treatments have minimal effects, except for respondents on the far-right, who exhibit large increases in support for higher income taxes and social spending. Our findings suggest that far-right voters’ attitudes toward redistribution may be more malleable than is often assumed.
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