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Whither the Progressive Tax?

  • Sylvain Dessy
  • Safa Ragued
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    The progressive wage tax is the instrument commonly used by democracies to fund public expenditures. Yet it still divides opinions about its impact on skill formation. We develop a general equilibrium model to analyze this impact, in the context of uncertain return on higher education. We show that the quantitative impact on skill formation of switching from the flat to the progressive tax varies with the level of efficiency with which higher education imparts graduates with suitable skills. This impact is negative when the level of efficiency of higher education is low and positive when it is high.

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    Paper provided by CIRPEE in its series Cahiers de recherche with number 1340.

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    Date of creation: 2013
    Date of revision:
    Handle: RePEc:lvl:lacicr:1340
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    1. Ali Dib & Mohamed Gammoudi & Kevin Moran, 2006. "Forecasting Canadian Time Series With the New-Keynesian Model," Working Papers Central Bank of Chile 382, Central Bank of Chile.
    2. John B. Burbidge & Kirk A. Collins & James B. Davies & Lonnie Magee, 2011. "Effective Tax and Subsidy Rates on Human Capital in Canada," University of Western Ontario, CIBC Centre for Human Capital and Productivity Working Papers 20114, University of Western Ontario, CIBC Centre for Human Capital and Productivity.
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    7. David Autor & Lawrence Katz & Alan Krueger, 1997. "Computing Inequality: Have Computers Changed the Labor Market?," Working Papers 756, Princeton University, Department of Economics, Industrial Relations Section..
    8. Michael B. Coelli, 2009. "Tuition fees and equality of university enrolment," Canadian Journal of Economics, Canadian Economics Association, vol. 42(3), pages 1072-1099, August.
    9. David Andolfatto & Scott Hendry & Kevin Moran, 2002. "Labour Markets, Liquidity, and Monetary Policy Regimes," Working Papers 02-32, Bank of Canada.
    10. Robert J. Barro, 2012. "Inflation and Economic Growth," CEMA Working Papers 568, China Economics and Management Academy, Central University of Finance and Economics.
    11. Hanushek, Eric & Charles Ka Yui Leung & Kuzey Yilmaz, 2002. "Redistribution through Education and Other Transfer Mechanisms," Royal Economic Society Annual Conference 2002 94, Royal Economic Society.
    12. Enrico Moretti, 2002. "Estimating the Social Return to Higher Education: Evidence From Longitudinal and Repeated Cross-Sectional Data," NBER Working Papers 9108, National Bureau of Economic Research, Inc.
    13. Nicholas Barr, 2004. "Higher Education Funding," Oxford Review of Economic Policy, Oxford University Press, vol. 20(2), pages 264-283, Summer.
    14. J. B. Burbidge & L. Magee & A. Leslie Robb, 2002. "The Education Premium in Canada and the United States," Canadian Public Policy, University of Toronto Press, vol. 28(2), pages 203-217, June.
    15. Nicholas Barr, 2004. "Higher education funding," LSE Research Online Documents on Economics 288, London School of Economics and Political Science, LSE Library.
    16. Elizabeth M. Caucutt & Krishna B. Kumar, 2000. "Higher Education Subsidies and Heterogeneity, A Dynamic Analysis," RCER Working Papers 472, University of Rochester - Center for Economic Research (RCER).
    17. Andrea Bassanini & Stefano Scarpetta, 2001. "Does Human Capital Matter for Growth in OECD Countries?: Evidence from Pooled Mean-Group Estimates," OECD Economics Department Working Papers 282, OECD Publishing.
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