Redistributive Taxation, Incentives, and the Intertemporal Evolution of Human Capital
Christian Ferreda and
Matias Tapia ()
Authors registered in the RePEc Author Service: Christian Ferrada
No 390, Documentos de Trabajo from Instituto de Economia. Pontificia Universidad Católica de Chile.
This paper contributes to the literature on redistributive taxation and human capital dynamics by explicitly analyzing the role of incentives in the education market where human capital is produced. We introduce an explicit education market with heterogeneous private schools in a dynamic stochastic general equilibrium model with overlapping generations and human capital accumulation. We use the model to simulate the effects of taxation on growth, intergenerational mobility, inequality, and welfare. Equalization in education expenditures reduces incentives for differentiation in the education market, with the distribution of education investments shifting towards the least productive schools. This has significant consequences on equilibrium outcomes, and highlights the importance of incorporating the role of intermediation when analyzing redistribution policies.
Keywords: Human capital; school market; redistributive taxation; inequality; efficiency (search for similar items in EconPapers)
JEL-codes: E24 H21 I21 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cmp, nep-dge, nep-edu, nep-hrm, nep-lab, nep-pbe and nep-pub
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Persistent link: https://EconPapers.repec.org/RePEc:ioe:doctra:390
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