Education Policies and Taxation without Commitment

Education Policies and Taxation without Commitment

We study the implications of limited commitment on education and tax policies set by benevolent governments. Consistent with real-world practices, a government can decide to subsidize different levels of education at different rates. A lack of commitment, however, affects the optimal structure of ed...

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Veröffentlicht in:The Scandinavian journal of economics 2018-10, Vol.120 (4), p.1075-1099
Hauptverfasser: Findeisen, Sebastian, Sachs, Dominik
Format: Artikel
Sprache:eng
Schlagworte:
Commitment
Economic models
Education policy
Inequality
Redistribution
Subsidies
Tax rates
Taxation
time inconsistency
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container_title The Scandinavian journal of economics
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creator Findeisen, Sebastian
Sachs, Dominik
description We study the implications of limited commitment on education and tax policies set by benevolent governments. Consistent with real-world practices, a government can decide to subsidize different levels of education at different rates. A lack of commitment, however, affects the optimal structure of education subsidies. The direction of the effect depends on how labor taxes are designed. With linear labor tax rates and a transfer for redistribution, subsidies become more progressive. By contrast, if the government is only constrained by informational asymmetries when designing taxes, subsidies become more regressive.
doi_str_mv 10.1111/sjoe.12246
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source Jstor Complete Legacy; Wiley Online Library Journals Frontfile Complete; PAIS Index; EBSCOhost Business Source Complete
subjects Commitment
Economic models
Education policy
Inequality
Redistribution
Subsidies
Tax rates
Taxation
time inconsistency
title Education Policies and Taxation without Commitment
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