Tax Policy and Human Capital Formation
14 Pages Posted: 30 Jun 2000 Last revised: 9 Oct 2010
Date Written: March 1998
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.
Suggested Citation: Suggested Citation
Here is the Coronavirus
related research on SSRN
Paper statistics
Recommended Papers
-
Identification and Estimation of Local Average Treatment Effects
By Joshua D. Angrist and Guido W. Imbens
-
Estimating the Return to Schooling: Progress on Some Persistent Econometric Problems
By David Card
-
By James J. Heckman, Lance Lochner, ...
-
Life Cycle Schooling and Dynamic Selection Bias: Models and Evidence for Five Cohorts
-
By James J. Heckman and Edward Vytlacil
-
Earnings, Schooling, and Ability Revisited
By David Card
