Teach a Man to Fish? Education vs. Optimal Taxation
AbstractIn models of redistribution, differences in human capital are often the relevant source of heterogeneity amongst individuals. Presumably, the distribution of human capital can be manipulated through education spending. This paper examines the use of education as a redistributive tool when there is a nonlinear tax system in place. The results show that taxation, whether under full or asymmetric information, substantially reduces the redistributive role of education spending in maximizing social welfare. This points to a conflict between the equalization of utility and human capital outcomes.
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Bibliographic InfoPaper provided by University of Alberta, Department of Economics in its series Working Papers with number 2010-15.
Length: 29 pages
Date of creation: 30 Aug 2010
Date of revision: 01 Apr 2011
optimal nonlinear taxation; redistribution; education;
Find related papers by JEL classification:
- D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
- H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-10-09 (All new papers)
- NEP-EDU-2010-10-09 (Education)
- NEP-LAB-2010-10-09 (Labour Economics)
- NEP-PUB-2010-10-09 (Public Finance)
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.:
- de Bartolome, Charles A M, 1990. "Equilibrium and Inefficiency in a Community Model with Peer Group Effects," Journal of Political Economy, University of Chicago Press, vol. 98(1), pages 110-33, February.
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