Job Market Paper

On the Joint Optimal Design of Taxes and Child Benefits

Author: Darapheak Tin

While means-tested child benefit and progressive tax systems aim to support low-income families, my empirical analysis based on Australian household survey data (HILDA) reveals that their interaction creates high, non-linear effective marginal tax rates (EMTRs) for low-income mothers. Building on these findings, this paper examines the joint optimal design of tax and child benefit systems using a dynamic general equilibrium model of overlapping generations, calibrated to Australia (2012-2018). The model incorporates rich household heterogeneity in family structure, age and number of children, female human capital, and uninsurable earnings risks. I find that an optimal tax reform, focused solely on income tax, requires reducing tax progressivity, which encourages labor supply primarily among highly educated women. However, it also raises tax liabilities for low-income parents, thereby undermining the objectives of child benefit programs. Read more

Paper Presentations to Date:

  • RSE Macroeconomics Seminar 2024 (Research School of Economics, ANU)
  • Joint Workshop by Australasian Macroeconomics Society (WAMS) and Laboratory for Aggregate Economics and Finance (LAEF)2024 (scheduled)

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Working Papers

Authors: Darapheak Tin and Chung Tran
Status: Under Review (IER)

Should government transfers to families with children be means-tested? We revisit this question from the unique Australian policy context, where average means-tested child benefits comprise up to 40% of the gross total income of low-income households, coinciding with the distinct M-shaped life cycle profile of labor supply for Australian mothers (Household survey data, HILDA 2001-2020). Motivated by these empirical facts, we explore the aggregate and distributive implications of means-testing and alternative child benefit designs quantitatively through a dynamic general equilibrium overlapping generations model of single and married households with children. Our simulation results demonstrate the significant adverse effects of means-testing on work incentives and human capital development among mothers. Read more

Paper Presentations to Date:

  • American Economic Association (AEA) Annual Meeting 2025 (Poster Session) (San Francisco, CA - scheduled)
  • Labour Econometrics Workshop (LEW) 2024 (University of Queensland)
  • Australian Conference of Economists (ACE) 2024 (University of Adelaide)
  • Society for Computational Economics 30th International Conference on Computing in Economics and Finance (CEF) 2024 (Nanyang Technological Institute)
  • 37th PhD Conference in Economics and Business 2023 (University of Melbourne)
  • Western Economics Association International (WEAI) 2023 Conference (University of Melbourne)
  • 21st Society for the Advancement of Economic Theory (SAET) Conference (Research School of Economics, ANU)
  • PhD Workshop 2022 (Research School of Economics, ANU)
  • RSE Macroeconomics Seminar Series 2022 (Research School of Economics, ANU)

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Sustained Growth and Income Dynamics in Australia

Authors: Darapheak Tin, Chung Tran, and Nabeeh Zakariyya
Status: Ongoing

What do we know about income growth in Australia? How are incomes distributed, and how do earners move within the income distribution? What does this tell us about income inequality and income mobility over time and over the life cycle, and for different demographic groups? This research addresses these questions through the lenses of Australian administrative data (ALIFE and PLIDA) and household survey data (HILDA).

Publications

“Lifecycle Earnings Risk and Insurance: New Evidence from Australia”

Authors: Darapheak Tin and Chung Tran
Published: Economic Record, 2023.

This paper studies the nature of earnings dynamics in Australia, using the Household, Income and Labour Dynamics in Australia (HILDA) Survey 2001–2020. Our results indicate that the distribution of earnings shocks displays negative skewness and excess kurtosis, deviating from the conventional linearity and normality assumptions. Wage changes are strongly associated with earnings changes and account more for the dispersion of earnings shocks; meanwhile, the contribution of hour changes is largely absent in upward movement and relatively small in downward movement of earnings changes. Read more

Paper Presentations to Date:

  • Australian Treasury 2022
  • Tax and Transfer Policy Institute (TTPI) Seminar Series 2022 (Crawford School of Public Policy, ANU)
  • 31st Australian Labour Market Research (ALMR) Workshop 2022 (Research School of Social Sciences, ANU)
  • Workshop of the Australasian Macroeconomics Society (WAMS) 2021 (Virtual)
  • A-Life Conference 2021 (Crawford School of Public Policy, ANU)
  • RSE PhD Workshop 2021 (Virtual, ANU)
  • RSE Macro Seminar series 2020 (Virtual, ANU)

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