Optimal taxation in the Uzawa-Lucas Model with externality in human capital
AbstractWe show that in the Uzawa-Lucas model with externality in human capital with agents that value both consumption and leisure, the government pursuing the first best can achieve its goal by subsidizing the foregone earnings while studying. The subsidy should be financed by a schooling fee. We obtain that countries with similar initial conditions may issue different fees because multiple equilibria can arise for empirically plausible values of parameters. This result differs from the one obtained in ananalogous economy where agents only value consumption.
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Bibliographic InfoPaper provided by Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie) in its series Working Papers. Serie AD with number 2011-19.
Length: 19 pages
Date of creation: Sep 2011
Date of revision:
Publication status: Published by Ivie
optimal policy; two-sector model; endogenous growth; indeterminacy.;
Other versions of this item:
- Arantza Gorostiaga & Jana Hromcová & Miguel-Ángel López-García, 2013. "Optimal taxation in the Uzawa–Lucas model with externality in human capital," Journal of Economics, Springer, vol. 108(2), pages 111-129, March.
- O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
- E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy
- H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
This paper has been announced in the following NEP Reports:
- NEP-ALL-2011-10-15 (All new papers)
- NEP-DGE-2011-10-15 (Dynamic General Equilibrium)
- NEP-FDG-2011-10-15 (Financial Development & Growth)
- NEP-PUB-2011-10-15 (Public Finance)
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