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How Do Taxes Affect Human Capital? The Role of Intergenerational Mobility

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  • Hendricks, Lutz A.

Abstract

This paper investigates how explicitly modeling the intergenerational transmission of human capital modifies the effects of tax policies obtained from standard life-cycle models. The main finding is that the intergenerational persistence of human capital is not an important determinant of the steady-state and transitional effects of several commonly studied tax policies. Conventional life-cycle models closely approximate the predictions generated by models with realistic intergenerational mobility properties. However, intergenerational persistence can substantially magnify the effects of policies that distort job training investment.

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Bibliographic Info

Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 11929.

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Date of creation: 01 Jan 2001
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Publication status: Published in Review of Economic Dynamics 2001, vol. 4, pp. 695-735
Handle: RePEc:isu:genres:11929

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Postal: Iowa State University, Dept. of Economics, 260 Heady Hall, Ames, IA 50011-1070
Phone: +1 515.294.6741
Fax: +1 515.294.0221
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Web page: http://www.econ.iastate.edu
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References

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  1. Ana Casta¤eda & Javier D¡az-Gim‚nez & Jos‚-Victor R¡os-Rull, 1998. "Earnings and wealth inequality and income taxation: quantifying the tradeoffs of switching to a proportional income tax in the U.S," Working Paper 9814, Federal Reserve Bank of Cleveland.
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  13. Lucas, Robert E, Jr, 1990. "Supply-Side Economics: An Analytical Review," Oxford Economic Papers, Oxford University Press, vol. 42(2), pages 293-316, April.
  14. James J. Heckman & Lance Lochner & Christopher Taber, 1999. "General Equilibrium Cost Benefit Analysis of Education and Tax Policies," NBER Working Papers 6881, National Bureau of Economic Research, Inc.
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Cited by:
  1. Lutz Hendricks, 2000. "Do Redistributive Policies Promote Intergenerational Mobility?," Econometric Society World Congress 2000 Contributed Papers 0607, Econometric Society.
  2. Hendricks, Lutz, 2007. "The intergenerational persistence of lifetime earnings," European Economic Review, Elsevier, vol. 51(1), pages 125-144, January.
  3. Igor Kotlán & Zuzana Machová & Lenka Janíčková, 2011. "Taxation Influence On The Economic Growth," Politická ekonomie, University of Economics, Prague, vol. 2011(5), pages 638-658.

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