Redistribution and Education Subsidies are Siamese Twins

@article{Bovenberg2005RedistributionAE,
  title={Redistribution and Education Subsidies are Siamese Twins},
  author={Ary Lans Bovenberg and Bas Jacobs},
  journal={Labor: Human Capital},
  year={2005}
}
We develop a model of human capital formation with endogenous labor supply and heterogeneous agents to explore the optimal level of education subsidies along with the optimal schedule of the labor income tax. If the government can observe inputs into the production of human capital, subsidies on education ensure efficiency in human capital accumulation and labor taxes are more progressive than without education policies. Although the able benefit more than proportionally from education… Expand
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