Does the representation of household behavior matter for welfare analysis of tax-benefit policies? An introduction

A widely shared intuition holds that individual control over money matters forthe decision process within the household and the subsequent distribution of re-sources and welfare. As a consequence, there are good reasons to depart from theunitary model of the household and to explore the possibilities offered by models of the family accounting for several decision makers in the household and for the potential impact of tax reforms on the balance of power. This paper summarizes boththe methodological and empirical findings presented in the next three papers of thisspecial issue of the Review of the Economics of the Household. This series of contributions primarily entails a concrete comparison of the policy implications of thechoice between the unitary and a particular multi-person representation: the collective representation. On the one hand, it suggests a methodology to implement thecollective model of labor supply in a realistic context where participation is modeled together with working hours, and where the full tax-benefit system is accounted for. On the other hand, the empirical part relies on comprehensive simulations of tax reforms in Belgium, France, Germany, Italy, Spain, and the United Kingdom, and allows to quantify the distortions that may affect policy recommendations based on the unitary model.