Human Capital and Optimal Redistribution

Winfried Koeniger and Julien Prat

VfS Annual Conference 2014 (Hamburg): Evidence-based Economic Policy from Verein für Socialpolitik / German Economic Association

Abstract: We show that more human capital improves incentives in a standard optimal taxation problem: common assumptions about preferences and technology imply that the disutility of labor decreases less strongly in unobserved ability if agents have more human capital. Human capital thus reduces the informational rents of high ability types and relaxes the incentive constraints. Since parents do not take the effect of human capital on incentives into account when choosing how much to invest into their children, there is a rationale for education subsidies.

JEL-codes: E24 H21 J24 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-dge, nep-hrm, nep-mac and nep-pbe
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Citations: View citations in EconPapers (2)

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https://www.econstor.eu/bitstream/10419/100357/1/VfS_2014_pid_463.pdf (application/pdf)

Related works:
Journal Article: Human Capital and Optimal Redistribution (2018)
Working Paper: Human Capital and Optimal Redistribution (2017)
Working Paper: Human Capital and Optimal Redistribution (2015)
Working Paper: Human Capital and Optimal Redistribution (2014)
Working Paper: Human Capital and Optimal Redistribution (2014)
Working Paper: Human capital and optimal redistribution (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:vfsc14:100357

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