Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/86607
Authors: 
Bovenberg, A. Lans
Jacobs, Bas
Year of Publication: 
2005
Series/Report no.: 
Tinbergen Institute Discussion Paper 05-036/3
Abstract: 
We develop models of optimal linear and non-linear income taxation with endogenous human capital formation to explore optimal education subsidies. Optimal subsidies on education ensure efficiency in human capital accumulation and thus play an important role in alleviating the tax distortions on learning induced by redistributive policies. If the government cannot verify all investments in human capital, education policy offsets some but not all tax-induced distortions on learning. Non-pecuniary educational costs (benefits) may increase (decrease) subsidies on education, especially if they are complementary to work effort.
Subjects: 
human capital
education subsidies
progressive taxation
redistribution
JEL: 
H2
H5
J2
Document Type: 
Working Paper

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