Education Policies and Taxation without Commitment

Sebastian Findeisen and Dominik Sachs

Munich Reprints in Economics from University of Munich, Department of Economics

Abstract: We study the implications of limited commitment on education and tax policies set by benevolent governments. Consistent with real-world practices, a government can decide to subsidize different levels of education at different rates. A lack of commitment, however, affects the optimal structure of education subsidies. The direction of the effect depends on how labor taxes are designed. With linear labor tax rates and a transfer for redistribution, subsidies become more progressive. By contrast, if the government is only constrained by informational asymmetries when designing taxes, subsidies become more regressive.

Date: 2018
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Citations: View citations in EconPapers (7)

Published in Scandinavian Journal of Economics 4 120(2018): pp. 1075-1099

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Journal Article: Education Policies and Taxation without Commitment (2018)
Working Paper: Education Policies and Taxation without Commitment (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:lmu:muenar:62816

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