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How Do Taxes Affect Human Capital? The Role of Intergenerational Mobility

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  • Hendricks, Lutz A.

Abstract

This paper investigates how explicitly modeling the intergenerational transmission of human capital modifies the effects of tax policies obtained from standard life-cycle models. The main finding is that the intergenerational persistence of human capital is not an important determinant of the steady-state and transitional effects of several commonly studied tax policies. Conventional life-cycle models closely approximate the predictions generated by models with realistic intergenerational mobility properties. However, intergenerational persistence can substantially magnify the effects of policies that distort job training investment.

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  • Hendricks, Lutz A., 2001. "How Do Taxes Affect Human Capital? The Role of Intergenerational Mobility," Staff General Research Papers Archive 11929, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genres:11929
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    Cited by:

    1. Lutz Hendricks, 2000. "Do Redistributive Policies Promote Intergenerational Mobility?," Econometric Society World Congress 2000 Contributed Papers 0607, Econometric Society.
    2. Hendricks, Lutz, 2007. "The intergenerational persistence of lifetime earnings," European Economic Review, Elsevier, vol. 51(1), pages 125-144, January.
    3. Igor Kotlán & Zuzana Machová & Lenka Janíčková, 2011. "Vliv zdanění na dlouhodobý ekonomický růst [Taxation Influence on the Economic Growth]," Politická ekonomie, Prague University of Economics and Business, vol. 2011(5), pages 638-658.
    4. Chih-Chin Ho & Ching-Yang Lin & Cheng-Tao Tang, 2013. "How Do Income and Bequest Taxes Affect Income Inequality? The Role of Parental Transfers," Working Papers EMS_2013_10, Research Institute, International University of Japan.
    5. Soojin Kim, 2014. "The Effects of Labor Migration on Optimal Taxation: An International Tax Competition Analysis," 2014 Meeting Papers 508, Society for Economic Dynamics.

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    More about this item

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity

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