Income Taxation, Tuition Subsidies, and Choice of Occupation

Geir Haakon Bjertnæs ()
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Geir Haakon Bjertnæs: Statistics Norway, https://www.ssb.no/en/forskning/ansatte

Discussion Papers from Statistics Norway, Research Department

Abstract: Differentiated tax rates on labor and capital income are found to be optimal in this study, where agents choose occupation based on lifetime income net of tuition costs. Efficient revenue raising in a case where the government can not observe educational effort implies that the government should trade off efficiency in production for efficiency in intertemporal consumption. The subsequent wage difference between high and low-skilled occupations is increased compared to a production efficient outcome, which is in contrast to previous results in the literature.

Keywords: Optimal income taxation; Subsidies for tuition; Skill formation; Production efficiency (search for similar items in EconPapers)
JEL-codes: H21 H24 (search for similar items in EconPapers)
Date: 2006-05
New Economics Papers: this item is included in nep-pbe and nep-pub
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