Article
Licensed
Unlicensed
Requires Authentication
Tax Progression and Human Capital in Imperfect Labour Markets
-
Published/Copyright:
November 30, 2019
Abstract
Recent contributions to the theory of taxation argue that tax progression raises welfare and employment in the presence of labour market imperfections. This literature takes the endowment of workers with human capital as given. The present paper analyses the effects of tax progression in a model with endogenous human capital formation. We show that the effect of tax progression on human capital investment depends on the deductibility of the cost of human capital formation. With full deductibility, tax progression raises employment and welfare. With incomplete deductibility, in contrast, the effect of tax progression on employment and welfare may be negative.
Published Online: 2019-11-30
Published in Print: 2001-02-01
© 2019 by Walter de Gruyter Berlin/Boston
You are currently not able to access this content.
You are currently not able to access this content.
