Resource title

Federation's alternative tax constitutions and risky education

Resource image

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Resource description

We analyze a two-period modell where risk-averse students divide their time between risky education, leisure, and work. The educated can migrate. Wagetax financed transfer to students acts as an insurance, and increases both investment in education and demand for leisure. We drive sufficient conditions for tax competition to lead to too low wage tax rates. We suggest, that the educated should pay their wage taxes to the region which has financed their education. We show that this would increase taxation and investment in education, and would benefit also the owners of the complementary factor.

Resource author

Panu Poutvaara

Resource publisher

Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/24324

Resource license

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