Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/110129
Authors: 
Lebon, Isabelle
Rebière, Thérèse
Year of Publication: 
2015
Series/Report no.: 
IZA Discussion Papers 8854
Abstract: 
This paper studies optimal taxation schemes for education in a search-matching model where the labor market is divided between a high-skill and a low-skill sector. Two public policy targets – maximizing the global employment level and optimizing the social surplus – are studied according to three different public taxation strategies. We calibrate our model using evidence from fourteen European countries, and compare our results with the target from the Europe 2020 Agenda for achievement in higher education. We show that, with current labor market characteristics, the target set by governments seems compatible with the social surplus maximization objective in some countries, while being too high for other countries. For all countries, maximizing employment would imply higher educational spending than that required for the social surplus to reach its maximum.
Subjects: 
educational policy
job search
matching model
optimal taxation
JEL: 
H21
H52
J21
J64
Document Type: 
Working Paper

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