Progressive taxes, equity, and human capital accumulation in an endogenous growth model with overlapping generations

Abstract

Progressive taxes, equity and human capital accumulation in an endogenous growth model with overlapping generations Bovenberg, Lans; van Ewijk, C.

Can Progressive Taxation Contribute to Economic Development?

“…Progressive taxation, for instance, could in theory adversely affect skill development, although this argument has little empirical support. Specifically, progressive taxation may discourage unskilled workers from developing their skills (Caucutt et al, 2006;Bovenberg and van Ewijk, 1997). The empirical evidence, though, does not lend support to this theoretical link.…”

Abatement Technology and the Environment-Growth Nexus with Education

“…Parameter B is the efficiency of schooling activities and h(s, t) is the stock of human capital at time t of an individual born at time s. For analytical convenience, we assume that the human capital of the agent when he or she is born, h(s, s), is inherited from the dying generation. To capture the intergenerational transmission of knowledge, we follow the assumption of Bovenberg and Van Ewijk (1997) by considering that newborns inherit the average aggregate human capital stock from the dying generation, that is h(s, s) = H(s) (population being equal to unity). 7…”

Tax Policy and Human Capital Formation with Public Investment in Education

“…In this setting, fiscal policy influences long-run growth through two channels: (i) the reallocation of time between studying and working induced by variations of prospective tax rates, and (ii) the link between educational spending, private savings and knowledge accumulation. With respect to Bovenberg and van Ewijk (1997), Meijdam (1998), and Yakita (2003), mechanism (ii) is peculiar to this model, since public spending may imply 1 According to the cross-country analysis by Barro and Sala-i-Martin (1995, chap.13), a 1.5 percent increase in the public education spending-GDP ratio would have raised the average growth rate by 0.3 percent per year in the period 1965-1975. 2 An exception is Buiter and Kletzer (1995): the authors study the effects of borrowing constraints when private and public spending in education are perfect substitutes.…”

“…In fact, some recent contributions also include educational expenditures in the learning process, and analyse the long-run effects of alternative policies by means of simulations using computable general equilibrium models (Docquier and Michel, 1999;Hendricks, 1999;Bouzahzah et al, 2002). However, most analytical results on the growth effects of taxation rule out productive educational expenditures: Bovenberg and van Ewijk (1997), Meijdam (1998), Heijdra and Ligthart (2000), and Yakita (2003) examine long-run distortions induced by taxing capital and labor incomes without assuming labor-enhancing monetary investment. 2 This paper studies the effects of alternative tax policies when both study time and educational expenditure improve human capital formation.…”