Tax effects, search unemployment, and the choice of educational type

Arbeitspapier

This paper examines the effect of taxes on the individuals? choices of educational direction, and thus on the economy's skill composition. A proportional labour income tax induces too many workers with high innate ability to choose an educational type with high consumption value and low effort costs. This increases the skill mismatch and aggregate unemployment in the economy. The government can correct for this distortion by use of differentiated tuition fees or tax rates.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 1622

Classification and Topics

• Classification: Wirtschaft ; Taxation and Subsidies: Efficiency; Optimal Taxation ; Mobility, Unemployment, and Vacancies: Public Policy ; Unemployment: Models, Duration, Incidence, and Job Search ; Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
• Subject: unemployment ; matching ; education ; optimal taxation ; tuition fees ; Einkommensteuer ; Steuerwirkung ; Friktionelle Arbeitslosigkeit ; Bildungsverhalten ; Arbeitslosigkeit ; Optimale Besteuerung ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Alstadsæter, Annette ; Kolm, Ann-Sofie ; Larsen, Birthe
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2005

Further information

• Handle: http://hdl.handle.net/10419/19086
• Last update: 10.03.2025, 11:42 AM CET