Higher education plays an important role in determining lifetime earnings. In turn, the decision to become educated depends to a large extent on family characteristics, such as wealth and cultural background. In this paper, we focus on the interaction between fiscal policies and educational choices when cultural background matters. We derive optimality conditions for a linear income tax and a lump-sum subsidy for education in a dynamic framework in which generations are linked by cultural background. The factors that determine their sign and magnitude include concerns for redistribution, efficiency, and the educational externality on future generations
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Paper provided by Centre for Studies in Economics and Finance (CSEF), University of Naples, Italy in its series CSEF Working Papers with number
59.
Length: Date of creation: 01 Jun 2001 Date of revision: Publication status: Published in Oxford Economic Papers 2002, vol. 54, pages 435-448 Handle: RePEc:sef:csefwp:59
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Barham, Vicky & Boadway, Robin & Marchand, Maurice & Pestieau, Pierre, 1995.
"Education and the poverty trap,"
European Economic Review,
Elsevier, vol. 39(7), pages 1257-1275, August.
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BARHAM, Vicky & BOADWAY, Robin & MARCHAND, Maurice & PESTIEAU, Pierre, 1992.
"Education and the poverty trap,"
CORE Discussion Papers
1992010, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).