Optimal policy and the risk properties of human capital reconsidered

Dan Anderberg

Journal of Public Economics, 2009, vol. 93, issue 9-10, 1017-1026

Abstract: This paper considers how optimal education and tax policy depends on the risk properties of human capital. A key feature of human capital investments is whether they increase or decrease wage risk. In a benchmark model it is shown that this feature alone determines whether a constrained optimal allocation should be characterized by a positive or a negative education premium. In the same model a positive intertemporal wedge is optimal. The robustness of these results is explored in two generalizations: nonobservability of education and nonobservability of consumption. Finally, policies that implement the constrained efficient allocations are considered.

Keywords: Education; Optimal; taxation; Risk (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (42)

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Related works:
Working Paper: Optimal Policy and the Risk-Properties of Human Capital Reconsidered (2009)
Working Paper: Optimal Policy and the Risk Properties of Human Capital Reconsidered (2008)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:pubeco:v:93:y:2009:i:9-10:p:1017-1026

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