Income Tax, Consumption Value of Education, and the Choice of Educational Type

30 Pages Posted: 10 Nov 2003

See all articles by Annette Alstadsæter

Annette Alstadsæter

School of Economics and Business, NMBU

Date Written: October 2003

Abstract

How the tax system might affect the individual's educational level is well studied. But the question of how the tax system affects the individual's choice of educational type is mostly ignored. This is an important issue, since the educational choice of today's young generation determines the skill composition of tomorrow's labor force and hence the future production possibilities of the country. This paper studies the problem in a partial model. A progressive tax system might in fact introduce distortions in the individuals's educational choice and induce him to choose more of the educational type with the higher consumption value. If he also puts more weight on the present than on the future, this effect is strengthened further.

JEL Classification: H25, I21, I29

Suggested Citation

Alstadsaeter, Annette, Income Tax, Consumption Value of Education, and the Choice of Educational Type (October 2003). CESifo Working Paper Series No. 1055. Available at SSRN: https://ssrn.com/abstract=462425

Annette Alstadsaeter (Contact Author)

School of Economics and Business, NMBU ( email )

P.O. Box 5003
NO-1432 Aas
Norway

HOME PAGE: http://www.nmbu.no/emp/annette.alstadsater

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