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The effects of a tax deduction for lifelong learning expenditures

Author

Listed:
  • Wiljan van den Berge

    (Utrecht University
    CPB Netherlands Bureau for Economic Policy Analysis)

  • Egbert Jongen

    (CPB Netherlands Bureau for Economic Policy Analysis
    IZA
    Leiden University)

  • Karen van der Wiel

    (IZA
    Dutch State Treasury Agency, Ministry of Finance
    ROA)

Abstract

We study the effects of a tax deduction for lifelong learning, exploiting exogenous variation in the effective costs of lifelong learning due to jumps in tax bracket rates. We use a regression kink design and tax return data on the universe of Dutch taxpayers. Low-income individuals show no response, but high-income individuals are more likely to report lifelong learning expenditures (though not a higher amount) when net costs are lower. Furthermore, for high-income individuals the effect peaks at the age interval 40–45 years of age.

Suggested Citation

  • Wiljan van den Berge & Egbert Jongen & Karen van der Wiel, 2023. "The effects of a tax deduction for lifelong learning expenditures," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 30(3), pages 729-756, June.
    • Handle: RePEc:kap:itaxpf:v:30:y:2023:i:3:d:10.1007_s10797-022-09736-y
    DOI: 10.1007/s10797-022-09736-y
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    More about this item

    Keywords

    Lifelong learning; Tax deduction; Regression kink design;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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