Human Capital Investment and Globalization in Extortionary States

Fredrik Andersson () and Kai Konrad

No 703, CESifo Working Paper Series from CESifo

Abstract: This paper considers education investment and public education policy in closed and open economies with an extortionary government. The extortionary government in a closed economy chooses an education policy in order to overcome a hold-up problem of time-consistent taxation similar to benevolent governments. The two types of government differ in their education policies if highly productive labor is mobile. Extortionary governments‘ incentives for a policy that stimulates higher private education efforts vanish; instead they have incentives to prevent individuals from mobility-increasing education investment. Tax competition therefore reduces hold-up problems of time-consistent extortionary taxation, but introduces other distortions that reduce workers' utility.

Keywords: migration; education; globalization; commitment; time consistent income taxation; globalisation (search for similar items in EconPapers)
Date: 2002
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Citations: View citations in EconPapers (9)

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Related works:
Journal Article: Human capital investment and globalization in extortionary states (2003)
Working Paper: Human Capital Investment and Globalization in Extortionary States (2001)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_703

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