Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/26777
Authors: 
Richter, Wolfram F.
Year of Publication: 
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

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