Family Policy with Non-Cooperative Families

We consider a non-cooperative model of a family's time allocation between market work and providing a home-produced family public good (such as child care or care for the elderly). The model predicts underprovision of the public good. Because of crowding out, this does not necessarily warrant public provision. In contrast to other approaches in family economics, we find that attempts to redistribute between spouses may alter the final distribution within the marriage, and that such a policy may be Pareto improving. We also find that some degree of progressivity of the income tax can be welfare improving.