Does the Tax System Encourage too Much Education?

Annette Alstadsæter

FinanzArchiv: Public Finance Analysis, 2002, vol. 59, issue 1, 27-48

Abstract: This paper provides an efficiency argument in favor of progressive labor income taxation. When the consumer faces a trade-off between investments in financial and human capital, a proportional comprehensive income tax tends to discriminate in favor of human capital investments. This effect is strengthened when education no longer is a pure investment, but also holds a direct consumption value.

JEL-codes: H21 H24 (search for similar items in EconPapers)
Date: 2002
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Working Paper: Does the Tax System Encourage Too Much Education? (2000)
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