Education Policies and Taxation without Commitment

Findeisen, Sebastian und Sachs, Dominik (2018): Education Policies and Taxation without Commitment. In: Scandinavian Journal of Economics, Bd. 120, Nr. 4: S. 1075-1099

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.

• Dokumententyp: Zeitschriftenartikel
• Fakultät: Volkswirtschaft
• Themengebiete: 300 Sozialwissenschaften > 330 Wirtschaft
• ISSN: 0347-0520
• Sprache: Englisch