Using Tax Deductions to Promote Lifelong Learning: Real and Shifting Responses

54 Pages Posted: 31 Jul 2017

See all articles by Wiljan Van den Berge

Wiljan Van den Berge

CPB Netherlands Bureau of Economic Policy Analysis

Egbert Jongen

CPB Netherlands Bureau of Economic Policy Analysis

Karen van der Wiel

CPB Netherlands Bureau of Economic Policy Analysis

Abstract

Policymakers are concerned about potential underinvestment in lifelong learning. In this paper we study to what extent a tax deduction helps to stimulate post-initial training. Specifically, we employ a regression kink and regression discontinuity design as jumps in tax bracket rates generate exogenous variation in the effective costs of lifelong learning. Using high quality data on tax returns of the universe of Dutch taxpayers, we find that the tax deduction has heterogeneous effects on lifelong learning. Low-income singles show no response. For high-income singles we find an effect of 10% on the probability to use the tax deduction. Furthermore, ignoring shifting of expenses between partners leads to spurious large estimates for primary earners and spurious negative estimates for secondary earners.

Keywords: lifelong learning, tax deduction, RKD, RDD

JEL Classification: C21, H20, J24

Suggested Citation

Van den Berge, Wiljan and Jongen, Egbert and van der Wiel, Karen, Using Tax Deductions to Promote Lifelong Learning: Real and Shifting Responses. IZA Discussion Paper No. 10885. Available at SSRN: https://ssrn.com/abstract=3010662

Wiljan Van den Berge (Contact Author)

CPB Netherlands Bureau of Economic Policy Analysis ( email )

P.O. Box 80510
2508 GM The Hague, 2585 JR
Netherlands

Egbert Jongen

CPB Netherlands Bureau of Economic Policy Analysis ( email )

P.O. Box 80510
2508 GM The Hague, 2585 JR
Netherlands

Karen Van der Wiel

CPB Netherlands Bureau of Economic Policy Analysis ( email )

P.O. Box 80510
2508 GM The Hague, 2585 JR
Netherlands

Register to save articles to
your library

Register

Paper statistics

Downloads
8
Abstract Views
75
PlumX Metrics