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Effective tax and subsidy rates on human capital in Canada

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  • John B. Burbidge
  • Kirk A. Collins
  • James B. Davies
  • Lonnie Magee

Abstract

. Effective tax and subsidy rates (ETRs and ESRs) on human capital investment via post‐secondary education are estimated for Canada in the years 2000 and 2006. The flattening of the federal personal income tax structure in 2001 substantially reduced the tax disincentive for investment in human capital. Effective subsidy rates also declined as public spending did not keep pace with rising tuition fees. The change on the tax side was strong enough to dominate the subsidy reduction according to our main results, but disaggregation shows that this result did not hold in all cases. Results are shown for College, Master's, and PhD programs, in addition to Bachelor's degrees. They are also broken down by gender, and are shown for the 25th and 75th percentiles as well as the median. Provincial detail and 1997 results are provided in the case of Bachelor's graduates. Les taux effectifs de taxation et de subvention sur l’investissement en capital humain via l’éducation post‐secondaire sont évalués pour les années 2000 et 2006. L’aplatissement de la structure d’imposition fédérale sur le revenu en 2001 a réduit substantiellement la désincitation fiscale à investir dans le capital humain. Les taux effectifs de subventions ont aussi déclinéà proportion que les dépenses publiques n’ont pas crû au rythme des frais de scolarité. Les changements côté impôts ont été assez importants pour dominer les impacts des réductions de subventions selon les résultats généraux, mais les résultats désagrégés montrent que cela ne tient pas dans tous les cas. On présente les résultats pour les collèges, les maîtrises et les doctorats en plus des baccalauréats. On ventile aussi les résultats selon le sexe, et on présente les résultats pour les 25e et 75e percentiles de gains ainsi que pour la médiane. On donne les résultats au niveau provincial en 1997 pour le cas des grades de premier cycle.

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  • John B. Burbidge & Kirk A. Collins & James B. Davies & Lonnie Magee, 2012. "Effective tax and subsidy rates on human capital in Canada," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 45(1), pages 189-219, February.
    • Handle: RePEc:wly:canjec:v:45:y:2012:i:1:p:189-219
    DOI: 10.1111/j.1540-5982.2011.01692.x
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    3. Jin Song & Terry Sicular & Bjorn Gustafsson, 2017. "China's Urban Gender Wage Gap: A New Direction?," University of Western Ontario, Centre for Human Capital and Productivity (CHCP) Working Papers 201723, University of Western Ontario, Centre for Human Capital and Productivity (CHCP).

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