Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/75578
Authors: 
Poutvaara, Panu
Kanniainen, Vesa
Year of Publication: 
1999
Series/Report no.: 
CESifo Working Paper 202
Abstract: 
It may be in the interest of low-ability individuals to subsidize the education of high-ability individuals. Sufficient conditions are surprisingly mild: positive externalities in education and complementarity in production between human capital and labor supllied by the low-ability individuals. However, tax competition and the free mobility of the educated give rise to time-inconsistency and free-riding problems which render such a social contract infeasible and result in a subotimally low investment in education.
Subjects: 
Externalities in education
complementarity
social contract
tax competition
Document Type: 
Working Paper

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