Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/46321
Authors: 
Richter, Wolfram F.
Kunze, Lars
Year of Publication: 
2011
Series/Report no.: 
CESifo working paper: Public Finance 3366
Abstract: 
The paper studies the effect that skilled labour mobility has on efficient education policy. The model is one of two periods in which a representative taxpayer decides on labour, education, and saving. The government can only use linear tax and subsidy instruments. It is shown that the mobility of skilled labour well constrains government's choice of policy instruments. The mobility does not however affect second best education policy in allocational terms. In particular, education should be effectively subsidized if, and only if, the elasticity of the earnings function is increasing in education. This rule applies regardless of whether labour is mobile or immobile.
Subjects: 
mobile labour
second-best efficient taxation
linear instruments
residence vs. source principle
JEL: 
H21
I28
J24
Document Type: 
Working Paper

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