Education policies and optimal taxation

Carrizosa, Darío Maldonado

doi:10.1007/s10797-006-9015-7

Cited by 42 publications

(80 citation statements)

References 24 publications

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“…Allowing for income effects (Allen 1982) and non-constant elasticities in the human capital production function will generally result in a role for general equilibrium effects determining optimal education policies. However, non-constant elasticities would give a role for education policies even in the absence of general equilibrium effects (Maldonado 2008;Jacobs and Bovenberg 2011). Moreover, income effects in labor supply would generate an additional channel (through the feedback of labor supply with human capital formation) whereby general equilibrium effects affect optimal education policies.…”

Section: Governmentmentioning

confidence: 99%

“…First, by allowing for endogenous wage rates, this paper contributes to a growing literature on optimal income tax and education policies; for earlier contributions, see, for example, Ulph (1977), Hare and Ulph (1979), Tuomala (1990), and Nielsen and Sørensen (1997). More recent contributions include Maldonado (2008), Alstadsaeter et al (2008), Grossman andPoutvaara (2009), andSchindler (2011). Second, a number of papers analyze optimal taxation if different skill types earn endogenously determined wages, and the government cannot tax or subsidize all production inputs at different rates.…”

Section: Introductionmentioning

confidence: 99%

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Optimal redistributive tax and education policies in general equilibrium

Jacobs

2012

Int Tax Public Finance

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This paper studies optimal linear and non-linear income taxes and education subsidies in two-type models with endogenous human capital formation, endogenous labor supply, and endogenous wage rates. Assuming constant human capital elasticities, human capital investment should be efficient under optimal linear policies, whether general equilibrium effects are present or not. Hence, education subsidies should not be used for distributional reasons. Due to general equilibrium effects, optimal linear income taxes may even become negative. Optimal non-linear policies exploit general equilibrium effects for redistribution. The high-skilled type optimally has a negative marginal income tax rate and a positive marginal education subsidy. The low-skilled type optimally faces a positive marginal income tax rate and a marginal tax on education. Simulations demonstrate that general equilibrium effects have only a modest effect on optimal non-linear policies.

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Section: Governmentmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

Optimal redistributive tax and education policies in general equilibrium

Jacobs

2012

Int Tax Public Finance

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“…If education increases (decreases) wage risk then, at the constrained efficient allocation, there is a strictly positive (negative) education 5 As noted by Maldonado (2008), wz/w can be either increasing or decreasing in θ even if we were to impose weak complementarity of z and θ in the wage function, i.e. if we assume w zθ ≥ 0.…”

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confidence: 99%

Optimal policy and the risk properties of human capital reconsidered

Anderberg

2009

Journal of Public Economics

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“…Discretionary decisions of individuals to acquire education may serve as a supplementary signal (to earned labor income) on the underlying unobserved innate earning ability, thereby mitigating the informational constraint faced by the government. 2 Two related recent studies are Bovenberg and Jacobs (2005) and Maldonado (2005). The first study shows that labor income taxation and education subsidies are Siamese twins.…”

mentioning

confidence: 99%