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Teach a Man to Fish? Education vs. Optimal Taxation

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  • Stephens, Eric

    (University of Alberta, Department of Economics)

Abstract

In models of redistribution, diff erences in human capital are often the relevant source of heterogeneity amongst individuals. Presumably, the distribution of human capital can be manipulated through education spending. This paper examines the use of education as a redistributive tool when there is a nonlinear tax system in place. The results show that taxation, whether under full or asymmetric information, substantially reduces the redistributive role of education spending in maximizing social welfare. This points to a conflict between the equalization of utility and human capital outcomes.

Suggested Citation

  • Stephens, Eric, 2010. "Teach a Man to Fish? Education vs. Optimal Taxation," Working Papers 2010-15, University of Alberta, Department of Economics, revised 27 Feb 2012.
    • Handle: RePEc:ris:albaec:2010_015
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    File URL: https://sites.ualberta.ca/~econwps/2010/wp2010-15.pdf
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    optimal nonlinear taxation; redistribution; education;
    All these keywords.

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation

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