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Investment in Education and Redistributive Taxation without Precommitment

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  • Poutvaara, Panu

Abstract

This paper compares private investment in risky education in a laissezfaire economy and with income redistribution. Obtaining higher education requires time and may require paying nondeductible resource costs. The paper shows that redistributive taxation may actually increase private investment in risky education also without precommitment.
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Suggested Citation

  • Poutvaara, Panu, 2003. "Investment in Education and Redistributive Taxation without Precommitment," Munich Reprints in Economics 19299, University of Munich, Department of Economics.
    • Handle: RePEc:lmu:muenar:19299
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    References listed on IDEAS

    as
    1. Hans-Werner Sinn, 1994. "A Theory of the Welfare State," CESifo Working Paper Series 65, CESifo.
    2. Hansson, Ingemar & Stuart, Charles, 1989. "Why Is Investment Subsidized?," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 30(3), pages 549-559, August.
    3. Anderberg Dan & Perroni Carlo, 2003. "Time-Consistent Policy and Politics: Does Voting Matter When Individuals Are Identical?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 3(1), pages 1-19, March.
    4. Eaton, Jonathan & Rosen, Harvey S, 1980. "Taxation, Human Capital, and Uncertainty," American Economic Review, American Economic Association, vol. 70(4), pages 705-715, September.
    5. repec:bla:scandj:v:97:y:1995:i:4:p:495-526 is not listed on IDEAS
    6. Andersson, Frederik & Konrad, Kai A., 2001. "Globalization and human capital formation [Globalisierung und Humankapitalinvestitionen]," Discussion Papers, Research Unit: Market Processes and Governance FS IV 01-01, WZB Berlin Social Science Center.
    7. repec:bla:econom:v:63:y:1996:i:250:p:171-89 is not listed on IDEAS
    8. Robin Boadway & Nicolas Marceau & Maurice Marchand, 1992. "Investment in Education and the Time Inconsistency of Redistributive Tax Policy," Working Paper 860, Economics Department, Queen's University.
    9. Konrad, Kai A., 2001. "Privacy and time-consistent optimal labor income taxation," Journal of Public Economics, Elsevier, vol. 79(3), pages 503-519, March.
    10. Patrick J. Kehoe, 1989. "Policy Cooperation Among Benevolent Governments May Be Undesirable," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 56(2), pages 289-296.
    11. Kydland, Finn E & Prescott, Edward C, 1977. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 473-491, June.
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    Citations

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    Cited by:

    1. Panu Poutvaara, 2006. "On the political economy of social security and public education," Journal of Population Economics, Springer;European Society for Population Economics, vol. 19(2), pages 345-365, June.
    2. Andersson, Fredrik & Konrad, Kai A, 2003. "Globalization and Risky Human-Capital Investment," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 10(3), pages 211-228, May.
    3. Sebastian Findeisen & Dominik Sachs, 2018. "Education Policies and Taxation without Commitment," Scandinavian Journal of Economics, Wiley Blackwell, vol. 120(4), pages 1075-1099, October.
    4. Dan Anderberg & Carlo Perroni, "undated". "Renegotiation of Social Contracts by Majority Rule," EPRU Working Paper Series 00-15, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
    5. Konrad, Kai A. & Andersson, Fredrik, 2001. "Globalization and Human Capital Formation," CEPR Discussion Papers 2657, C.E.P.R. Discussion Papers.

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    More about this item

    JEL classification:

    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • I22 - Health, Education, and Welfare - - Education - - - Educational Finance; Financial Aid

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