Education and Optimal Dynamic Taxation: The Role of Income-Contingent Student Loans ∗
| Title: | Education and Optimal Dynamic Taxation: The Role of Income-Contingent Student Loans ∗ |
|---|---|
| Authors: | Sebastian Findeisen; Dominik Sachs; Jel-classification H; Friedrich Breyer; Manuel Amador; Dan Anderberg; Carlos Da Costa; Emmanuel Farhi; Mike Golosov; Bas Jacobs; Elena Mattana; Florian Scheuer; Dirk Schindler; Kjetil Storesletten; Aleh Tsyvinski; Iván Werning |
| Contributors: | The Pennsylvania State University CiteSeerX Archives |
| Source: | http://hassler-j.iies.su.se/Courses/DynPubFin/Papers/FindeisenJob Market Paper.pdf. |
| Publication Year: | 2011 |
| Collection: | CiteSeerX |
| Subject Terms: | Optimal dynamic taxation; Education; Implementation |
| Description: | We study Pareto optimal tax and education policies when human capital upon labor market entry is endogenous and individuals face wage uncertainty. Though optimal labor distortions are history-dependent, i.e. depend on income and education, simple policy instruments can yield the desired distortions: a single nonlinear labor income tax schedule combined with income-contingent loans. To take the model to the (US) data, we simplify the model to a binary education decision (graduating from college or not). We find that for low and intermediate incomes the labor supply decision of college graduates should be distorted more heavily than for individuals without a college degree. As a consequence, the optimal student loan repayment schedule increases in income for this range. This result holds along the Pareto frontier. We compare the second best to a situation where loan repayment is restricted to be independent from income and find significant welfare gains. |
| Document Type: | text |
| File Description: | application/pdf |
| Language: | English |
| Relation: | http://citeseerx.ist.psu.edu/viewdoc/summary?doi=10.1.1.297.5746 |
| Availability: | http://citeseerx.ist.psu.edu/viewdoc/summary?doi=10.1.1.297.5746; http://hassler-j.iies.su.se/Courses/DynPubFin/Papers/FindeisenJob Market Paper.pdf |
| Rights: | Metadata may be used without restrictions as long as the oai identifier remains attached to it. |
| Accession Number: | edsbas.DA621C76 |
| Database: | BASE |