Education and Optimal Dynamic Taxation: The Role of Income-Contingent Student Loans

@article{Findeisen2015EducationAO,
  title={Education and Optimal Dynamic Taxation: The Role of Income-Contingent Student Loans},
  author={Sebastian Findeisen and Dominik Sachs},
  journal={Political Economy: Government Expenditures \& Related Policies eJournal},
  year={2015}
}
  • S. Findeisen, Dominik Sachs
  • Published 1 May 2015
  • Economics
  • Political Economy: Government Expenditures & Related Policies eJournal
We study the optimal design of integrated education finance and tax systems. The distribution of wages is endogenously determined by the costly education decisions of heterogeneous individuals before labor market entry. Consistent with empirical evidence, this human capital investment decision is risky. We find that an integrated education and tax system in which the government provides education loans to young individuals coupled with income-contingent repayment can always be designed in a… 
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