Risky Education, Taxation, and Mobility of Labor

Panu Poutvaara

University of Helsinki, Department of Economics from Department of Economics

Abstract: This thesis analyzes optimal wage taxation and the effects of wage taxation on investment in risky education, first in a closed economy and then in a federation with alternative tax constitutions. In the first period, students divide their time between education, leisure and work as uneducated labor. In the second period, they supply human capital created in the first period to the labor market. The author shows that a wage-tax dinancied lump-sum transfer induces risk-averse students to allocate more time both to risky education and to leisure. The optimal wage tax rate for those to be educated is shown to be less than one. In our model, only those to be educated pay wage taxes, and the expected tax revenued are returned to students as lump-sum transfers.

Keywords: TAXATION; FISCAL POLICY; EDUCATION (search for similar items in EconPapers)
JEL-codes: H21 H87 I22 (search for similar items in EconPapers)
Pages: 82 pages
Date: 1999
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fth:helsec:81

Access Statistics for this paper

More papers in University of Helsinki, Department of Economics from Department of Economics University of Helsinki; Department of Economics, P.O.Box 54 (Unioninkatu 37) FIN-00014 Helsingin Yliopisto. Contact information at EDIRC.
Bibliographic data for series maintained by Thomas Krichel ().