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The effects of the tax system on education decisions and welfare


  • Lari Arthur Viianto

    (Universidad de Alicante)


I study the effects of a linear tax schedule on educational decisions and welfare in a two period model where the educational decision is discrete and its return is uncertain. I find that a linear tax rate has a positive effect on the number of agents who decide to acquire higher education. This effect becomes negative when the revenue is returned as a lump-sum transfer. The government can influence the education level to some extent using a linear tax schedule. However this policy always has a negative welfare effect. I also find that if there is a revenue need a welfare maximizing government will prefer a linear tax to a lump-sum tax.

Suggested Citation

  • Lari Arthur Viianto, 2010. "The effects of the tax system on education decisions and welfare," Working Papers. Serie AD 2010-11, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
  • Handle: RePEc:ivi:wpasad:2010-11

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    References listed on IDEAS

    1. Annette Alstadsæter, 2001. "Does the Tax System Encourage too much Education?," CESifo Working Paper Series 612, CESifo.
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    Cited by:

    1. Jorge González-Chapela, 2010. "Things that make us different: analysis of variance in the use of time," Working Papers. Serie AD 2010-18, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    2. Francisco Martínez-Sánchez & Miguel González-Maestre, 2010. "The role of program quality and publicly-owned platforms in the free to air broadcasting industry," Working Papers. Serie AD 2010-19, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    3. Sonia Oreffice & Climent Quintana, 2009. "Anthropometry and Socioeconomics in the Couple: Evidence from the PSID," Working Papers 2009-22, FEDEA.
    4. Anna P. Kireenko & Tatyana Y. Krasikova, 2023. "Personal Income Tax Deductions and Demand for Education: Case of Russia," Journal of Tax Reform, Graduate School of Economics and Management, Ural Federal University, vol. 9(2), pages 145-160.

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      More about this item


      Education; taxation; welfare.;
      All these keywords.

      JEL classification:

      • I20 - Health, Education, and Welfare - - Education - - - General
      • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General
      • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
      • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household

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