Abstract
We develop a model of human capital formation with endogenous labor supply and heterogeneous agents to explore the optimal level of education subsidies along with the optimal progressive schedule of the labor income tax and optimal capital income taxes.Subsidies on education ensure efficiency in human capital accumulation, while taxes on skilled labor help to redistribute income towards the less able.We thus provide a rationale for the widely observed presence of education subsidies.The actually observed tax codes and level of education subsidies suggest that a large part of education subsidies can be justified on these grounds.
| Original language | English |
|---|---|
| Place of Publication | Tilburg |
| Publisher | Macroeconomics |
| Number of pages | 50 |
| Volume | 2001-82 |
| Publication status | Published - 2001 |
Publication series
| Name | CentER Discussion Paper |
|---|---|
| Volume | 2001-82 |
UN SDGs
This output contributes to the following UN Sustainable Development Goals (SDGs)
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SDG 8 Decent Work and Economic Growth
Keywords
- redistribution
- education
- subsidies
- human capital
- taxation
- income tax
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