Education, Redistributive Taxation and Confidence

25 Pages Posted: 2 Feb 2005

See all articles by Kai A. Konrad

Kai A. Konrad

Max Planck Institute for Tax Law and Public Finance; Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute for Economic Research); IZA Institute of Labor Economics

Amedeo Spadaro

University of the Balearic Islands - Facultat de Ciències Econòmiques i Empresarials; Paris School of Economics (PSE)

Date Written: January 2005

Abstract

We consider redistributional taxation between people with and without human capital if education is endogenous and if individuals differ in their perceptions about own ability. Those who see their ability as low like redistributive taxation because of the transfers it generates. Those who see their ability as high may also like redistributive taxation because it stops other people receiving education and increases the quasi rents on their own human capital. It is surprising that this rather indirect effect can overcompensate them for the income loss from taxation and make the overconfident want higher taxes than the less confident do. The results, however, turn out to be in line with empirical evidence on the desired amount of redistribution among young individuals.

Keywords: education, redistribution, confidence

JEL Classification: D78, H23, I21

Suggested Citation

Konrad, Kai A. and Spadaro, Amedeo, Education, Redistributive Taxation and Confidence (January 2005). IZA Discussion Paper No. 1478; WZB - Markets and Political Economy Working Paper No. SP II 2005-05, Available at SSRN: https://ssrn.com/abstract=659182

Kai A. Konrad (Contact Author)

Max Planck Institute for Tax Law and Public Finance ( email )

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Munich, 80539
Germany

HOME PAGE: http://www.tax.mpg.de/en/pub/home.cfm

Centre for Economic Policy Research (CEPR)

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CESifo (Center for Economic Studies and Ifo Institute for Economic Research)

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Munich, 81679
Germany

IZA Institute of Labor Economics

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Bonn, 53072
Germany

Amedeo Spadaro

University of the Balearic Islands - Facultat de Ciències Econòmiques i Empresarials ( email )

Crta. de Valldemossa km 7, 5
07071 Palma Mallorca
Spain
00-34-971-173077 (Phone)

Paris School of Economics (PSE) ( email )

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Paris, 75014 75014
France
+33-1-43136344 (Phone)

HOME PAGE: http://www.pse.ens.fr

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