IDEAS home Printed from https://ideas.repec.org/a/eee/ecolet/v245y2024ics0165176524005408.html
   My bibliography  Save this article

Comovement of labor supply and human capital investment in policy analysis

Author

Listed:
  • Jeong, Minhyeon
  • Jung, Euiyoung
  • Lee, Chul-In

Abstract

Quantitative studies of human capital report the comovement of labor and human capital investment in response to policy changes, which is usually understood based on the intuition that human capital is utilized only while working: both inputs are complements in the formation of effective labor. Given the lack of (i) theoretical analysis of exact conditions and (ii) the preference-side intuition that both inputs involve disutility leading to a similar comovement, we fill the gap. The general condition for the comovement specifies the minimum extent of disutility smoothing between labor and human capital investment, and the prior intuition relaxes this condition, raising comovement possibilities. The conclusion has wide applicabilities in policy analysis.

Suggested Citation

  • Jeong, Minhyeon & Jung, Euiyoung & Lee, Chul-In, 2024. "Comovement of labor supply and human capital investment in policy analysis," Economics Letters, Elsevier, vol. 245(C).
    • Handle: RePEc:eee:ecolet:v:245:y:2024:i:c:s0165176524005408
    DOI: 10.1016/j.econlet.2024.112056
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0165176524005408
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.econlet.2024.112056?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to

    for a different version of it.

    References listed on IDEAS

    as
    1. Fatih Guvenen & Burhanettin Kuruscu & Serdar Ozkan, 2014. "Taxation of Human Capital and Wage Inequality: A Cross-Country Analysis," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 81(2), pages 818-850.
    2. Marek Kapička & Julian Neira, 2019. "Optimal Taxation with Risky Human Capital," American Economic Journal: Macroeconomics, American Economic Association, vol. 11(4), pages 271-309, October.
    3. Trostel, Philip A, 1993. "The Effect of Taxation on Human Capital," Journal of Political Economy, University of Chicago Press, vol. 101(2), pages 327-350, April.
    4. Lucas, Robert E, Jr, 1990. "Supply-Side Economics: An Analytical Review," Oxford Economic Papers, Oxford University Press, vol. 42(2), pages 293-316, April.
    5. Jonathan Heathcote & Kjetil Storesletten & Giovanni L. Violante, 2020. "How Should Tax Progressivity Respond to Rising Income Inequality?," NBER Working Papers 28006, National Bureau of Economic Research, Inc.
    6. Jonathan Heathcote & Kjetil Storesletten & Giovanni L Violante, 2020. "Presidential Address 2019: How Should Tax Progressivity Respond to Rising Income Inequality?," Journal of the European Economic Association, European Economic Association, vol. 18(6), pages 2715-2754.
    7. Stefanie Stantcheva, 2017. "Optimal Taxation and Human Capital Policies over the Life Cycle," Journal of Political Economy, University of Chicago Press, vol. 125(6), pages 1931-1990.
    8. Michael J. Boskin, 1975. "Notes on the Tax Treatment of Human Capital," NBER Working Papers 0116, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Musab Kurnaz & Mehmet Soytas, 2019. "Early Childhood Investment and Income Taxation," 2019 Meeting Papers 290, Society for Economic Dynamics.
    2. Bovenberg, A. Lans & van Ewijk, Casper, 1997. "Progressive taxes, equity, and human capital accumulation in an endogenous growth model with overlapping generations," Journal of Public Economics, Elsevier, vol. 64(2), pages 153-179, May.
    3. Lin, Shuanglin, 1998. "Labor income taxation and human capital accumulation," Journal of Public Economics, Elsevier, vol. 68(2), pages 291-302, May.
    4. Brendler, Pavel, 2023. "Rising earnings inequality and optimal income tax and social security policies," Journal of Monetary Economics, Elsevier, vol. 134(C), pages 35-52.
    5. Kurnaz, Musab & Soytas, Mehmet A., 2025. "Intergenerational income mobility and income taxation," Journal of Economic Dynamics and Control, Elsevier, vol. 176(C).
    6. Theo Eicher & Stephen Turnovsky & Maria Carme Riera i Prunera, 2003. "Effects of differential taxation on factor accumulation and growth," Working Papers in Economics 98, Universitat de Barcelona. Espai de Recerca en Economia.
    7. Syed M. Ahsan & Panagiotis Tsigaris, 2011. "The Utility Compensated Effects of a Wage Tax on Human Capital and Consumption Decisions," Public Finance Review, , vol. 39(4), pages 571-593, July.
    8. Artige, Lionel & Cavenaile, Laurent, 2023. "Public education expenditures, growth and income inequality," Journal of Economic Theory, Elsevier, vol. 209(C).
    9. Freddy Heylen & Renaat Van de Kerckhove, 2014. "Heterogeneous ability and the effects of fiscal policy on employment, income and welfare in general equilibrium," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 14/898, Ghent University, Faculty of Economics and Business Administration.
    10. Christopher Herrington, 2015. "Public Education Financing, Earnings Inequality, and Intergenerational Mobility," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 18(4), pages 822-842, October.
    11. Gian Maria Milesi-Ferretti & Nouriel Roubini, 1995. "Growth Effects of Income and Consumption Taxes: Positive and Normative Analysis," Working Papers 95-18, New York University, Leonard N. Stern School of Business, Department of Economics.
    12. Tom Krebs & Moritz Kuhn & Mark Wright, 2016. "Insurance in Human Capital Models with Limited Enforcement," CAMA Working Papers 2016-48, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    13. Pedro Cavalcanti Ferreira & Samuel de Abreu Pessoa, 2007. "The Effects of Longevity and Distortions on Education and Retirement," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 10(3), pages 472-493, July.
    14. Philip A. Trostel, 1996. "Should Education Be Subsidized?," Public Finance Review, , vol. 24(1), pages 3-24, January.
    15. Daniele Coen‐Pirani, 2021. "Geographic Mobility And Redistribution," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 62(3), pages 921-952, August.
    16. Trostel, Philip A., 1995. "The Effect of Deficit Finance on Human Capital," National Tax Journal, National Tax Association;National Tax Journal, vol. 48(4), pages 531-546, December.
    17. Lutz Hendricks, 2001. "How Do Taxes Affect Human Capital? The Role of Intergenerational Mobility," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 4(3), pages 695-735, July.
    18. Lutz Hendricks, 2001. "Growth, Death, and Taxes," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 4(1), pages 26-57, January.
    19. Nicholas Apergis, 2015. "Labor Income Tax and Output in a Panel of Central and Eastern European Countries: A Long-Run Perspective," International Advances in Economic Research, Springer;International Atlantic Economic Society, vol. 21(1), pages 1-12, March.
    20. David W. Berger & Kyle F. Herkenhoff & Simon Mongey, 2022. "Minimum Wages, Efficiency and Welfare," Opportunity and Inclusive Growth Institute Working Papers 058, Federal Reserve Bank of Minneapolis.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:ecolet:v:245:y:2024:i:c:s0165176524005408. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ecolet .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.