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

Michele Gubello () and Nora Strecker

No 889, LIS Working papers from LIS Cross-National Data Center in Luxembourg

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.

JEL-codes: H24 H31 H41 I23 (search for similar items in EconPapers)
Pages: 68 pages
Date: 2024-10
New Economics Papers: this item is included in nep-pbe and nep-pub
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Persistent link: https://EconPapers.repec.org/RePEc:lis:liswps:889

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