Income Tax, Consumption Value of Education, and the Choice of Educational Type
AbstractHow the tax system might affect the individual’s educational level is well studied. But the question of how the tax system affects the individual’s choice of educational type is mostly ignored. This is an important issue, since the educational choice of today’s young generation determines the skill composition of tomorrow’s labor force and hence the future production possibilities of the country. This paper studies the problem in a partial model. A progressive tax system might in fact introduce distortions in the individuals’s educational choice and induce him to choose more of the educational type with the higher consumption value. If he also puts more weight on the present than on the future, this effect is strengthened further.
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Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 1055.
Date of creation: 2003
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ALL-2004-05-02 (All new papers)
- NEP-EDU-2004-05-02 (Education)
- NEP-LAB-2004-05-02 (Labour Economics)
- NEP-PBE-2004-05-02 (Public Economics)
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