Designing Efficient Education and Tax Policies

Konferenzbeitrag

We study education and income tax policies in a model with endogenous selection into college. Our framework is strongly influenced by the empirical college literature and incorporates heterogenous returns and tastes for college, earnings risk (implying uncertain returns to college) and potentially borrowing constraints. We (i) calculate revenue effects of various policy reforms starting from the current system and (ii) derive conditions for optimal education and tax policies with various degrees of sophistication: optimal college subsidies for given income taxes and vice versa, jointly optimal taxes and subsidies, and optimal education dependent taxes. We estimate the relevant parameters of the model for quantitative analysis. We find that the endogeneity of the college choice has only a small impact on optimal taxes and increasing subsidies to their optimal level leads to large welfare gains. Finally, we find that for the current US policies, an increase in education subsidies is self-financing via higher tax revenue in the future; if we allow grants to condition on parental background, this effect gets even stronger and children with poor academic background should receive higher subsidies for pure efficiency reasons -- efficient policies favor social mobility.

Angaben zum Objekt

• Sprache: Englisch

Verweise und Beziehungen

• Erschienen in: Series: Beiträge zur Jahrestagung des Vereins für Socialpolitik 2014: Evidenzbasierte Wirtschaftspolitik - Session: Dynamic Public Finance ; No. B03-V2

Klassifikation und Themen

• Klassifikation: Wirtschaft ; Taxation and Subsidies: Efficiency; Optimal Taxation ; Taxation and Subsidies: Externalities; Redistributive Effects; Environmental Taxes and Subsidies ; Educational Finance; Financial Aid

Beteiligte, Orts- und Zeitangaben

• Ereignis: Geistige Schöpfung
• (wer): Sachs, Dominik ; Findeisen, Sebastian
• Ereignis: Veröffentlichung
• (wer): ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften, Leibniz-Informationszentrum Wirtschaft
• (wo): Kiel und Hamburg
• (wann): 2014

Weitere Informationen

• Handle: http://hdl.handle.net/10419/100504
• Letzte Aktualisierung: 10.03.2025, 11:43 MEZ