Arbeitspapier

Taxing Human Capital: A Good Idea

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This paper studies a Ramsey optimal taxation model with human capital in an infinite-horizon setting. Contrary to Jones, Manuelli, and Rossi (1997), the human capital production function does not include the current stock of human capital as a production factor. As a result, the return to human capital, namely labor income, does not vanish in equilibrium. In a stationary state, the household underinvests in human capital relative to the first best, i.e., education is distorted. Human capital is effectively taxed. The optimal tax scheme prescribes making the cost of education not fully tax-deductible.

ISBN
978-3-86788-229-3
Language
Englisch

Bibliographic citation
Series: Ruhr Economic Papers ; No. 202

Classification
Wirtschaft
Taxation and Subsidies: Efficiency; Optimal Taxation
Education: Government Policy
Human Capital; Skills; Occupational Choice; Labor Productivity
Subject
optimal taxation
human capital
Ramsey approach

Event
Geistige Schöpfung
(who)
Braun, Christoph
Event
Veröffentlichung
(who)
Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI)
(where)
Essen
(when)
2010

Handle
Last update
10.03.2025, 11:44 AM CET

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Object type

  • Arbeitspapier

Associated

  • Braun, Christoph
  • Rheinisch-Westfälisches Institut für Wirtschaftsforschung (RWI)

Time of origin

  • 2010

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