Effects of Redistribution Policies - Who Gains and Who Loses?
AbstractThe paper combines optimal taxation theory with human capital theory and develops a theoretical model with endogenous wages and education decision, in which redistributive policy experiments are carried out and assessed. It is argued that general equilibrium effects of labor income taxation on wages may counteract fiscal redistribution. It is also shown that education subsidies may only benefit skilled workers, suggesting that this subsidy can merely be viewed as a redistribution from unskilled to skilled individuals. Therefore, optimal policy involves a lump-sum education tax in the form of a negative education subsidy.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Stockholm University, Department of Economics in its series Research Papers in Economics with number 2007:12.
Length: 33 pages
Date of creation: 27 Jun 2007
Date of revision:
Contact details of provider:
Postal: Department of Economics, Stockholm, S-106 91 Stockholm, Sweden
Phone: +46 8 16 20 00
Fax: +46 8 16 14 25
Web page: http://www.ne.su.se/
More information through EDIRC
Income Redistribution; Education Subsidies;
Find related papers by JEL classification:
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
- H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
This paper has been announced in the following NEP Reports:
- NEP-ALL-2007-06-30 (All new papers)
- NEP-DGE-2007-06-30 (Dynamic General Equilibrium)
- NEP-EDU-2007-06-30 (Education)
- NEP-LAB-2007-06-30 (Labour Economics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Brett, Craig & Weymark, John A., 2003.
"Financing education using optimal redistributive taxation,"
Journal of Public Economics,
Elsevier, vol. 87(11), pages 2549-2569, October.
- Craig Brett & John A. Weymark, 2000. "Financing Education Using Optimal Redistributive Taxation," Vanderbilt University Department of Economics Working Papers 0038, Vanderbilt University Department of Economics, revised May 2001.
- Trostel, P. & Walker, I., 2000.
"Education and Work,"
The Warwick Economics Research Paper Series (TWERPS)
554, University of Warwick, Department of Economics.
- Robert A.J. Dur & Coen N. Teulings, 2003.
"Are Education Subsidies an Efficient Redistributive Device?,"
Tinbergen Institute Discussion Papers
03-024/3, Tinbergen Institute, revised 19 Sep 2003.
- Robert Dur & Coen Teulings, 2003. "Are education subsides an efficient redistributive device?," LSE Research Online Documents on Economics 19493, London School of Economics and Political Science, LSE Library.
- Robert Dur & Coen Teulings, 2003. "Are Education Subsides an Efficient Redistributive Device?," CEE Discussion Papers 0030, Centre for the Economics of Education, LSE.
- Joshua Angrist & Alan Krueger, 1990.
"Does Compulsory School Attendance Affect Schooling and Earnings?,"
653, Princeton University, Department of Economics, Industrial Relations Section..
- Angrist, Joshua D & Krueger, Alan B, 1991. "Does Compulsory School Attendance Affect Schooling and Earnings?," The Quarterly Journal of Economics, MIT Press, vol. 106(4), pages 979-1014, November.
- Joshua D. Angrist & Alan B. Krueger, 1990. "Does Compulsory School Attendance Affect Schooling and Earnings?," NBER Working Papers 3572, National Bureau of Economic Research, Inc.
- Allen, Franklin, 1982. "Optimal linear income taxation with general equilibrium effects on wages," Journal of Public Economics, Elsevier, vol. 17(2), pages 135-143, March.
- Feldstein, Martin, 1973. "On the optimal progressivity of the income tax," Journal of Public Economics, Elsevier, vol. 2(4), pages 357-376.
- Fair, Ray C, 1971. "The Optimal Distribution of Income," The Quarterly Journal of Economics, MIT Press, vol. 85(4), pages 551-79, November.
- Sheshinski, Eytan, 1972. "The Optimal Linear Income-Tax," Review of Economic Studies, Wiley Blackwell, vol. 39(3), pages 297-302, July.
- CREMER, Helmuth & PESTIEAU, Pierre & THIBAULT, Emmanuel & VIDAL, Jean-Pierre, .
"Optimal tax and education policy when agents differ in altruism and productivity,"
CORE Discussion Papers RP
-1830, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Helmuth Cremer & Pierre Pestieau & Emmanuel Thibault & Jean-Pierre Vidal, 2005. "Optimal Tax and Education Policy When Agents Differ in Altruism and Productivity," Annals of Economics and Finance, Society for AEF, vol. 6(2), pages 209-228, November.
- Spence, A Michael, 1973. "Job Market Signaling," The Quarterly Journal of Economics, MIT Press, vol. 87(3), pages 355-74, August.
- William Blankenau, 1999. "A Welfare Analysis of Policy Responses to the Skilled Wage Premium," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 2(4), pages 820-849, October.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sten Nyberg).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.