Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/192441 
Year of Publication: 
2006
Series/Report no.: 
Discussion Papers No. 459
Publisher: 
Statistics Norway, Research Department, Oslo
Abstract: 
Differentiated tax rates on labor and capital income are found to be optimal in this study, where agents choose occupation based on lifetime income net of tuition costs. Efficient revenue raising in a case where the government can not observe educational effort implies that the government should trade off efficiency in production for efficiency in intertemporal consumption. The subsequent wage difference between high and low-skilled occupations is increased compared to a production efficient outcome, which is in contrast to previous results in the literature.
Subjects: 
Optimal income taxation
Subsidies for tuition
Skill formation
Production efficiency
JEL: 
H21
H24
Document Type: 
Working Paper

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