Optimal taxation in the Uzawa-Lucas Model with externality in human capital

Arantza Gorostiaga (), Jana Hromcová and Miguel Ángel López García ()
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Arantza Gorostiaga: Dpto. Fundamentos del Análisis Económico II
Miguel Ángel López García: Dpt. Economia Aplicada
Authors registered in the RePEc Author Service: Miguel-Angel Lopez-Garcia

Working Papers. Serie AD from Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie)

Abstract: We show that in the Uzawa-Lucas model with externality in human capital with agents that value both consumption and leisure, the government pursuing the first best can achieve its goal by subsidizing the foregone earnings while studying. The subsidy should be financed by a schooling fee. We obtain that countries with similar initial conditions may issue different fees because multiple equilibria can arise for empirically plausible values of parameters. This result differs from the one obtained in ananalogous economy where agents only value consumption.

Keywords: optimal policy; two-sector model; endogenous growth; indeterminacy. (search for similar items in EconPapers)
JEL-codes: E62 H31 O41 (search for similar items in EconPapers)
Pages: 19 pages
Date: 2011-09
New Economics Papers: this item is included in nep-dge, nep-fdg and nep-pub
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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http://www.ivie.es/downloads/docs/wpasad/wpasad-2011-19.pdf Fisrt version / Primera version, 2011 (application/pdf)

Related works:
Journal Article: Optimal taxation in the Uzawa–Lucas model with externality in human capital (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:ivi:wpasad:2011-19

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