Resource title

Tax effects, search unemployment, and the choice of educational type

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Resource description

This paper examines the effect of taxes on the individuals? choices of educational direction, and thus on the economy?s skill composition. A proportional labour income tax induces too many workers with high innate ability to choose an educational type with high consumption value and low effort costs. This increases the skill mismatch and aggregate unemployment in the economy. The government can correct for this distortion by use of differentiated tuition fees or tax rates.

Resource author

Annette Alstadsæter, Ann-Sofie Kolm, Birthe Larsen

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Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/19086

Resource license

Adapt according to the presented license agreement and reference the original author.