Corpus ID: 14293964

The Dynamics of Optimal Taxation when Human Capital is Endogenous

@inproceedings{Kapika2006TheDO,
  title={The Dynamics of Optimal Taxation when Human Capital is Endogenous},
  author={Marek Kapi{\vc}ka},
  year={2006}
}
This paper characterizes the dynamics of Pareto efficient income taxes in a dynamic economy with human capital accumulation. I extend the tools and insights developed by Mirrlees (1971) into a dynamic framework. I follow Diamond (1998) by assuming that there are no income effects on labor supply. If the government can freely borrow and save, I show that i) the problem of finding efficient allocation can be decomposed into two relatively simple stages and ii) if agents have access to capital… Expand

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