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Title:Taxing human capital efficiently: the double dividend of taxing nonqualified labour more heavily than qualified labour PDF Logo
Authors:Richter, Wolfram F.
Issue Date:2007
Series/Report no.:Ruhr economic papers 12
Abstract:Assuming isoelastic returns to education and an endogenous supply of qualified and nonqualified labour, it is shown to be second-best efficient not to distort the choice of education. Furthermore, taxation should set incentives so that qualified labour is substituted for nonqualified labour. As a result, it is efficient to tax labour income regressively with respect to qualification and to tax the monetary cost of education at a level that restores efficiency in education. Atax on capital income alleviates the distortion that progressive taxation of labour income exerts on human-capital investment.
Subjects:Endogenous choice of education and labour
efficient taxation of human and nonhuman capital
double-dividend hypothesis
JEL:H21
I28
J24
Document Type:Working Paper
Appears in Collections:Publikationen von Forscherinnen und Forschern des RWI
Ruhr Economic Papers, RWI

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