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Human Capital Investment and Globalization in Extortionary States

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Author Info
Andersson, Fredrik (Lund University)
Konrad, Kai A. () (Free University of Berlin and IZA, Bonn)

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Abstract

This paper considers education investment and public education subsidies in closed and open economies with an extortionary government. The extortionary government in a closed economy has incentives to subsidize education in order to overcome a hold-up problem of time consistent taxation, similar to benevolent governments. The two types of government differ in their education policies if highly productive labor is fully mobile. Extortionary governments’ incentives for education subsidies vanish and they even have an incentive to prevent individuals from mobility increasing education investment. Tax competition therefore reduces hold-up problems of time consistent extortionary taxation, but also introduces incentives that reduce workers’ utility.

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Publisher Info
Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 239.

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Length: 28 pages
Date of creation: Jan 2001
Date of revision:
Handle: RePEc:iza:izadps:dp239

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Related research
Keywords: Globalization commitment time consistent income taxation migration education

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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

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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.:

  1. Varian, Hal R., 1980. "Redistributive taxation as social insurance," Journal of Public Economics, Elsevier, vol. 14(1), pages 49-68, August. [Downloadable!] (restricted)
  2. Jonathan Eaton & Harvey S. Rosen, 1980. "Taxation, Human Capital, and Uncertainty," NBER Reprints 0097, National Bureau of Economic Research, Inc.
    Other versions:
  3. Kydland, Finn E. & Prescott, Edward C., 1980. "Dynamic optimal taxation, rational expectations and optimal control," Journal of Economic Dynamics and Control, Elsevier, vol. 2(1), pages 79-91, May. [Downloadable!] (restricted)
  4. Stiglitz, Joseph E., 1982. "Self-selection and Pareto efficient taxation," Journal of Public Economics, Elsevier, vol. 17(2), pages 213-240, March. [Downloadable!] (restricted)
    Other versions:
  5. Konrad, Kai A., 2001. "Privacy and time-consistent optimal labor income taxation," Journal of Public Economics, Elsevier, vol. 79(3), pages 503-519, March. [Downloadable!] (restricted)
  6. Boadway, Robin & Marceau, Nicolas & Marchand, Maurice, 1996. "Investment in Education and the Time Inconsistency of Redistributive Tax Policy," Economica, London School of Economics and Political Science, vol. 63(250), pages 171-89, May. [Downloadable!] (restricted)
  7. Andersson, Fredrik & Konrad, Kai A., 2001. "Human Capital Investment and Globalization in Extortionary States," IZA Discussion Papers 239, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
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Cited by:
(explanations, 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.)

  1. Wolfram F. Richter, 2006. "Taxing Human Capital Efficiently: The Double Dividend of Taxing Non-Qualified Labour More Heavily Than Qualified Labour," IZA Discussion Papers 2328, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  2. Alexander Kemnitz, . "Educational Federalism and the Quality Effects of Tuition Fees," IVS discussion paper series 617, Institut für Volkswirtschaft und Statistik (IVS), University of Mannheim. [Downloadable!]
  3. Lommerud, Kjell Erik & Olsen, Trond E. & Straume, Odd Rune, 2005. "Access regulation and cross-border mergers: Is international coordination beneficial?," Discussion Papers 2005/8, Department of Finance and Management Science, Norwegian School of Economics and Business Administration. [Downloadable!]
  4. Bovenberg, A.L. & Jacobs, B., 2001. "Redistribution and education subsidies are siamese twins," Discussion Paper 82, Tilburg University, Center for Economic Research. [Downloadable!]
    Other versions:
  5. Kai A. Konrad & Dan Kovenock, 2008. "Competition for FDI with vintage investment and agglomeration advantages," Purdue University Economics Working Papers 1210, Purdue University, Department of Economics. [Downloadable!]
    Other versions:
  6. van Praag, Bernard M.S. & Ferrer-i-Carbonell, Ada, 2001. "Age-Differentiated QALY Losses," IZA Discussion Papers 314, Institute for the Study of Labor (IZA). [Downloadable!]
    Other versions:
  7. Christiane Schuppert, 2007. "Does mobility of educated workers undermine decentralized education policies?," Discussion Papers in Economics 07_01, University of Dortmund, Department of Economics. [Downloadable!]
  8. Hartmut Egger & Josef Falkinger & Volker Grossmann, 2007. "Brain Drain, Fiscal Competition, and Public Education Expenditure," IZA Discussion Papers 2747, Institute for the Study of Labor (IZA). [Downloadable!]
  9. Alexander Haupt, 2005. "The Evolution of Public Spending on Higher Education in a Democracy," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
  10. Andersson, Fredrik & Konrad, Kai A., 2002. "Human Capital Investment and Globalization in Extortionary States," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
    Other versions:
  11. Robert A. J. Dur & Amihai Glazer, 2005. "Subsidizing Enjoyable Education," CESifo Working Paper Series CESifo Working Paper No. , CESifo GmbH. [Downloadable!]
    Other versions:
  12. Alexander Haupt & Eckhard Janeba, 2004. "Education, Redistribution, and the Threat of Brain Drain," NBER Working Papers 10618, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  13. Alexander Haupt & Eckhard Janeba, 2003. "Bildung im Zeitalter mobilen Humankapitals," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 72(2), pages 173-187. [Downloadable!] (restricted)
  14. Tim Krieger & Thomas Lange, 2008. "Education policy and tax competition with imperfect student and labor mobility," Working Papers 8, University of Paderborn, CIE Center for International Economics. [Downloadable!]
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