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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"Does Compulsory School Attendance Affect Schooling and Earnings?,"
653, Princeton University, Department of Economics, Industrial Relations Section..
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- 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.
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- Brett, Craig & Weymark, John A., 2003.
"Financing education using optimal redistributive taxation,"
Journal of Public Economics,
Elsevier, vol. 87(11), pages 2549-2569, October.
- 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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