Altruism, Labor Supply and Redistributive Neutrality

This paper presents a model of familial altruism in which labor supply is chosen endogenously. The model is used to address the predictions of Ricardian Equiva-lence, both theoretical and empirical. It is argued that, to the extent that income variation in the data comes mostly from wage and effort changes, the empirical tests of neutrality are misspecified. Numerical estimates suggest that quantita-tively important deviations from neutrality may be at work