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Age-dependent taxes with endogenous human capital formation

Author

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  • Carlos da Costa

    (Fundacao Getulio Vargas)

Abstract

We calculate optimal age-dependent labor income taxes in an environment for which the age efficiency profile is endogenously determined by human capital investment. Heterogeneous individuals are exposed to idiosyncratic shocks to their human capital investments, a key element, along with the endogeneity of human capital itself in the determination of optimal age-dependent taxes. Our results highlight the complementary role of capital income taxation when human capital is endogenous. The nature of human capital accumulation is quantitatively relevant for determining the age dependence of income taxes. We assess the cost of ignoring the endogenous nature of age-efficiency profiles.

Suggested Citation

  • Carlos da Costa, 2015. "Age-dependent taxes with endogenous human capital formation," 2015 Meeting Papers 824, Society for Economic Dynamics.
    • Handle: RePEc:red:sed015:824
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    File URL: https://economicdynamics.org/meetpapers/2015/paper_824.pdf
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    References listed on IDEAS

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    1. Julian Neira & Marek Kapicka, 2012. "Optimal Taxation in a Life-Cycle Economy with Endogenous Human Capital Formation," 2012 Meeting Papers 1164, Society for Economic Dynamics.
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    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Age-dependent taxes with endogenous human capital formation
      by Christian Zimmermann in NEP-DGE blog on 2015-10-21 19:47:46

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    Cited by:

    1. Findeisen, Sebastian & Sachs, Dominik, 2017. "Redistribution and insurance with simple tax instruments," Journal of Public Economics, Elsevier, vol. 146(C), pages 58-78.
    2. William Peterman, 2016. "The effect of endogenous human capital accumulation on optimal taxation," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 21, pages 46-71, July.
    3. Woodland, A., 2016. "Taxation, Pensions, and Demographic Change," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 713-780, Elsevier.
    4. Blandin, Adam & Peterman, William B., 2019. "Taxing capital? The importance of how human capital is accumulated," European Economic Review, Elsevier, vol. 119(C), pages 482-508.

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