Tax Policy and Human Capital Formation with Public Investment in Education
This paper studies the e¤ects of distortionary taxes and public in- vestment in an endogenous growth OLG model with knowledge trans- mission. Fiscal policy a¤ects growth in two respects: .rst, work time reacts to variations of prospective tax rates and modi.es knowledge formation; second, public spending enhances labour e¢ ciency but also stimulates physical capital through increased savings. It is shown that Ramsey-optimal policies reduce savings due to high tax rates on young generations, and are not necessarily growth-improving with respect to a pure private system. Non-Ramsey policies that shift the burden on adults are always growth-improving due to crowding-in e¤ects: the welfare of all generations is unambiguously higher with respect to a private system, and there generally exists a continuum of non-optimal tax rates under which long-run growth and welfare are higher than with the Ramsey-optimal policy.
(This abstract was borrowed from another version of this item.)
Volume (Year): 86 (2005)
Issue (Month): 3 (December)
|Contact details of provider:|| Web page: http://www.springerlink.com/link.asp?id=108909|
References listed on IDEAS
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.:
- Heijdra, Ben J & Ligthart, Jenny E, 2000.
"The Dynamic Macroeconomic Effects of Tax Policy in an Overlapping Generations Model,"
Oxford Economic Papers,
Oxford University Press, vol. 52(4), pages 677-701, October.
- Ben J. Heijdra & Johanna Elisabeth Ligthart, 1998. "The Dynamic Macroeconomic Effects of Tax Policy in an Overlapping Generations Model," IMF Working Papers 98/182, International Monetary Fund.
- Willem H. Buiter & Kenneth M. Kletzer, 1995.
"Capital Mobility, Fiscal Policy and Growth under Self-Financing of Human Capital Formation,"
NBER Working Papers
5120, National Bureau of Economic Research, Inc.
- Willem H. Buiter & Kenneth M. Kletzer, 1995. "Capital Mobility, Fiscal Policy, and Growth under Self-Financing of Human Capital Formation," Canadian Journal of Economics, Canadian Economics Association, vol. 28(s1), pages 163-94, November.
- Buiter, Willem H. & Kletzer, Kenneth, 1995. "Capital Mobility, Fiscal Policy and Growth Under Self-Financing of Human Capital Formation," CEPR Discussion Papers 1179, C.E.P.R. Discussion Papers.
- José De Gregorio & Se-Jik Kim, 1998.
"Credit Markets with Differences in Abilities: Education, Distribution, and Growth,"
Documentos de Trabajo
42, Centro de Economía Aplicada, Universidad de Chile.
- De Gregorio, Jose & Kim, Se-Jik, 2000. "Credit Markets with Differences in Abilities: Education, Distribution, and Growth," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 41(3), pages 579-607, August.
- Jose De Gregorio & Se-Jik Kim, 1994. "Credit Markets with Differences in Abilities: Education, Distribution, and Growth," IMF Working Papers 94/47, International Monetary Fund.
- 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.
- Bovenberg, A.L. & van Ewijk, C., 1997. "Progressive taxes, equity and human capital accumulation in an endogenous growth model with overlapping generations," Other publications TiSEM 6d8dd905-8f4d-4b98-8202-1, Tilburg University, School of Economics and Management.
- De Gregorio, Jose, 1996. "Borrowing constraints, human capital accumulation, and growth," Journal of Monetary Economics, Elsevier, vol. 37(1), pages 49-71, February.
- Zvi Eckstein & Itzhak Zilcha, 1991.
"The Effects of Compulsory Schooling on Growth, Income Distribution and Welfare,"
Boston University - Institute for Economic Development
20, Boston University, Institute for Economic Development.
- Eckstein, Zvi & Zilcha, Itzhak, 1994. "The effects of compulsory schooling on growth, income distribution and welfare," Journal of Public Economics, Elsevier, vol. 54(3), pages 339-359, July.
- Eckstein, Z. & Zilcha, I., 1991. "The Effects of Compulsury Schooling on Growth Income Distribution and Welfare," Papers 38-91, Tel Aviv.
- Meijdam, A.C., 1998. "Taxes, Growth and Welfare in an Endogenous Growth Model with Overlapping Generations," Discussion Paper 1998-133, Tilburg University, Center for Economic Research.
- Hendricks, Lutz A., 1999.
"Taxation and Long-Run Growth,"
Staff General Research Papers
11933, Iowa State University, Department of Economics.
- Docquier, Frederic & Michel, Philippe, 1999. " Education Subsidies, Social Security and Growth: The Implications of a Demographic Shock," Scandinavian Journal of Economics, Wiley Blackwell, vol. 101(3), pages 425-40, September.
- Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
- Benhabib, Jess & Spiegel, Mark M., 1994. "The role of human capital in economic development evidence from aggregate cross-country data," Journal of Monetary Economics, Elsevier, vol. 34(2), pages 143-173, October.
- Glomm, Gerhard & Ravikumar, B, 1992. "Public versus Private Investment in Human Capital Endogenous Growth and Income Inequality," Journal of Political Economy, University of Chicago Press, vol. 100(4), pages 818-34, August.
- Hendricks, Lutz, 1999. "Taxation and long-run growth1," Journal of Monetary Economics, Elsevier, vol. 43(2), pages 411-434, April.
- Gale, David, 1973. "Pure exchange equilibrium of dynamic economic models," Journal of Economic Theory, Elsevier, vol. 6(1), pages 12-36, February.
- Yakita, Akira, 2003. "Taxation and growth with overlapping generations," Journal of Public Economics, Elsevier, vol. 87(3-4), pages 467-487, March.
- W.H. Buiter & K Kletzer, 1995. "Capital Mobility," CEP Discussion Papers dp0245, Centre for Economic Performance, LSE.
When requesting a correction, please mention this item's handle: RePEc:kap:jeczfn:v:86:y:2005:i:3:p:229-258. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Sonal Shukla)or (Christopher F. Baum)
If references are entirely missing, you can add them using this form.