Three essays on the applied microeconomics of households

Petia Petrova, Boston College

Abstract

The first chapter (with Richard Arnott) considers an atomistic developer who decides when and at what density to develop his land, under a property value tax system characterized by three time-invariant tax rates: τ V, the tax rate on pre-development land value; τ S, the tax rate on post-development residual site value; and τ K, the tax rate on structure value. Arnott (2002) identified the subset of property value tax systems which are neutral. This paper investigates the relative efficiency of four idealized, non-neutral property value tax systems [(i) “Canadian” property tax system: τ V = 0, τS = τ K; (ii) simple property tax system: τ V = τS = τ K; (iii) residual site value tax system: τ K = 0, τV = τ S; (iv) differentiated property tax system: τ V = τS > τ K > 0] under the assumption of a constant rental growth rate.

The second chapter adds to the controversial literature on private annuities. First, I explore whether growing up in a rich family can make someone more patient and, therefore, more prone to annuitize. Second, I draw from recent literature in psychology on the problem of “overconfidence”, and argue it could apply to someone's estimation of his or her life expectancy and hence to his or her propensity to annuitize. I find that appealing to these kinds of explanations does little to explain why relatively few people purchase annuities at the point of retirement.

The third chapter examines whether a parent's illness causes adult children to provide their parents with financial assistance. Using the Mexican Health and Aging Study (MHAS), I find that mother's health status matters for transfers from children, but father's health status has no impact on transfers. These results are consistent with the theory that children care for their parents because they may be expecting them to provide childcare to their own children.

Subject Area

ECONOMICS, GENERAL (0501); ECONOMICS, LABOR (0510)

Recommended Citation

Petia Petrova, "Three essays on the applied microeconomics of households" (January 1, 2004). Boston College Dissertations and Theses. Paper AAI3142883.
http://escholarship.bc.edu/dissertations/AAI3142883