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A Theory of Perverse Redistribution in Higher Education and Income Tax Progressivity in Europe

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  • Michele Gubello
  • Nora Strecker

Abstract

This paper studies the effect of income tax progressivity on the disproportionate use of publicly funded higher education. We show that more progressive tax systems increase low-income households’ net fiscal benefit of higher education, making their children more likely to attend university. To increase the university enrollment of children from low-income households, the “degree” of income tax progressivity must increase along the income distribution. “Weakly progressive” tax systems can determine a perverse redistribution equilibrium, in which poorer households subsidize the higher education for richer households.

Suggested Citation

  • Michele Gubello & Nora Strecker, 2024. "A Theory of Perverse Redistribution in Higher Education and Income Tax Progressivity in Europe," LIS Working papers 889, LIS Cross-National Data Center in Luxembourg.
    • Handle: RePEc:lis:liswps:889
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    References listed on IDEAS

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    1. Ron Diris & Erwin Ooghe, 2018. "The economics of financing higher education," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 33(94), pages 265-314.
    2. Rieth, Malte & Checherita-Westphal, Cristina & Attinasi, Maria-Grazia, 2016. "Personal income tax progressivity and output volatility: Evidence from OECD countries," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 49(3), pages 968-996.
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    4. Koen Declercq & Frank Verboven, 2015. "Socio-economic status and enrollment in higher education: do costs matter?," Education Economics, Taylor & Francis Journals, vol. 23(5), pages 532-556, October.
    5. Kara, Elif & Tonin, Mirco & Vlassopoulos, Michael, 2021. "Class size effects in higher education: Differences across STEM and non-STEM fields," Economics of Education Review, Elsevier, vol. 82(C).
    6. Maria De Paola & Michela Ponzo & Vincenzo Scoppa, 2013. "Class size effects on student achievement: heterogeneity across abilities and fields," Education Economics, Taylor & Francis Journals, vol. 21(2), pages 135-153, March.
    7. Kennedy, Peter E. & Siegfried, John J., 1997. "Class size and achievement in introductory economics: Evidence from the TUCE III data," Economics of Education Review, Elsevier, vol. 16(4), pages 385-394, October.
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    More about this item

    JEL classification:

    • I23 - Health, Education, and Welfare - - Education - - - Higher Education; Research Institutions
    • H41 - Public Economics - - Publicly Provided Goods - - - Public Goods
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

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