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http://ssrn.com/abstract=226207
 
 

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Tax Policy and Human Capital Formation


James J. Heckman


University of Chicago - Department of Economics; National Bureau of Economic Research (NBER); American Bar Foundation; Institute for the Study of Labor (IZA); CESifo (Center for Economic Studies and Ifo Institute)

Lance Lochner


University of Western Ontario - Department of Economics; National Bureau of Economic Research (NBER)

Christopher Taber


National Bureau of Economic Research (NBER); University of Wisconsin - Madison

March 1998

NBER Working Paper No. w6462

Abstract:     
Missing from recent discussions of tax reform is any systematic analysis of the effects of various tax proposals on skill formation. This gap in the literature in empirical public finance is due to the absence of any empirically based general equilibrium models with both human capital formation and physical capital formation that are consistent with observations on modern labor markets. This paper is a progress report on our ongoing research on formulating and estimating dynamic general equilibrium models with endogenous heterogeneous human capital accumulation. Our model explains many features of rising wage inequality in the U.S. economy (James Heckman, Lance Lochner and Christopher Taber, 1998). In this paper, we use our model to study the impacts on skill formation of proposals to switch from progressive taxes to flat income and consumption taxes. For the sake of brevity, we focus on steady states in this paper, although we study both transitions and steady states in our research.

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Date posted: June 30, 2000  

Suggested Citation

Heckman, James J. and Lochner, Lance and Taber, Christopher, Tax Policy and Human Capital Formation (March 1998). NBER Working Paper No. w6462. Available at SSRN: http://ssrn.com/abstract=226207

Contact Information

James J. Heckman (Contact Author)
University of Chicago - Department of Economics ( email )
1126 East 59th Street
Chicago, IL 60637
United States
773-702-0634 (Phone)
773-702-8490 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
American Bar Foundation
750 N. Lake Shore Drive
Chicago, IL 60611
United States
Institute for the Study of Labor (IZA)
P.O. Box 7240
Bonn, D-53072
Germany
CESifo (Center for Economic Studies and Ifo Institute)
Poschinger Str. 5
Munich, DE-81679
Germany
Lance Lochner
University of Western Ontario - Department of Economics ( email )
London, Ontario N6A 5B8
Canada
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Christopher R. Taber
National Bureau of Economic Research (NBER) ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
University of Wisconsin - Madison ( email )
716 Langdon Street
Madison, WI 53706-1481
United States
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