Effects of Redistribution Policies - Who Gains and Who Loses?
The paper combines optimal taxation theory with human capital theory and develops a theoretical model with endogenous wages and education decision, in which redistributive policy experiments are carried out and assessed. It is argued that general equilibrium effects of labor income taxation on wages may counteract fiscal redistribution. It is also shown that education subsidies may only benefit skilled workers, suggesting that this subsidy can merely be viewed as a redistribution from unskilled to skilled individuals. Therefore, optimal policy involves a lump-sum education tax in the form of a negative education subsidy.
|Date of creation:||27 Jun 2007|
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- Craig Brett & John A. Weymark, 2000. "Financing Education Using Optimal Redistributive Taxation," Vanderbilt University Department of Economics Working Papers 0038, Vanderbilt University Department of Economics, revised May 2001.
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- William Blankenau, 1999. "A Welfare Analysis of Policy Responses to the Skilled Wage Premium," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 2(4), pages 820-849, October.
- Philip Trostel & Ian Walker, 2006.
"Education and Work,"
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- Trostel, P. & Walker, I., 2000. "Education and Work," The Warwick Economics Research Paper Series (TWERPS) 554, University of Warwick, Department of Economics.
- Helmuth Cremer & Pierre Pestieau & Emmanuel Thibault & Jean-Pierre Vidal, 2005.
"Optimal Tax and Education Policy When Agents Differ in Altruism and Productivity,"
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Society for AEF, vol. 6(2), pages 209-228, November.
- CREMER, Helmuth & PESTIEAU, Pierre & THIBAULT, Emmanuel & VIDAL, Jean-Pierre, "undated". "Optimal tax and education policy when agents differ in altruism and productivity," CORE Discussion Papers RP 1830, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Feldstein, Martin, 1973. "On the optimal progressivity of the income tax," Journal of Public Economics, Elsevier, vol. 2(4), pages 357-376.
- Eytan Sheshinski, 1972. "The Optimal Linear Income-tax," Review of Economic Studies, Oxford University Press, vol. 39(3), pages 297-302.
- Michael Spence, 1973. "Job Market Signaling," The Quarterly Journal of Economics, Oxford University Press, vol. 87(3), pages 355-374.
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