Author: Lutz Hendricks
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
Get Book Here
Book Description
How do taxes affect human capital accumulation? This question has been studied extensively in the context of two model classes: overlapping generations (OLG) and infinite horizon (IH) models. These embody very different assumptions about the intergenerational transmission of physical and human capital. OLG models typically abstract from intergenerational linkages, while IH models implicitly assume that new agents inherit human and physical capital from their parents. This paper investigates how such differences in intercohort persistence affect the responsiveness of human capital to taxation. A model is developed that nests OLG and IH models as special cases. Analytical expressions for the steady state tax elasticities of human capital are derived for versions of the model with varying degrees of persistence. The main finding is that higher persistence increases the responsiveness of human capital to both wage and capital income taxes. As a result, IH models generate larger tax elasticities than do OLG models with incomplete persistence, even if cohorts are altruistically linked. In a calibrated version of the model, moving from no persistence to complete persistence increases the tax elasticity of human capital by a factor between two and three.
Author: Lutz Hendricks
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
Get Book Here
Book Description
Existing studies of the effects of taxation on human capital accumulation are based on models with extreme intergenerational mobility properties. One strand of the literature uses life-cycle models, in which intergenerational mobility is perfect. Another strand relies on models of infinitely lived dynasties, in which intergenerational persistence is perfect. Hendricks (1999a) shows that the predicted tax effects differ in important ways across the two model classes, in large part due to the extreme mobility properties implied by standard infinite horizon and life-cycle models. It is therefore important to study the effects of taxes in environments with realistic intergenerational mobility properties. To this end, this paper develops an overlapping generations model of taxation and human capital accumulation which matches features of the intergenerational transmission of earnings and education estimated from a panel of U.S. workers. The main finding is that abstracting from the intergenerational transmission of human capital, as is typically done in life-cycle models, has little impact on the predicted effects of tax reforms. In contrast, models with extreme degrees of intergenerational persistence, as implicit in infinite horizon models, generate very different outcomes. This finding cautions against the use of infinite horizon models of human capital accumulation.
Author: Fatih Guvenen
Publisher: DIANE Publishing
ISBN: 1437934900
Category : Business & Economics
Languages : en
Pages : 57
Get Book Here
Book Description
Wage inequality has been significantly higher in the U.S. than in continental European countries since the 1970s. This report studies the role of labor income tax policies (LITP) for understanding these facts. Countries with more progressive LITP have significantly lower before-tax wage inequality at different points in time. Progressivity is also negatively correlated with the rise in wage inequality during this period. Wage inequality arises from differences across individuals in their ability to learn new skills as well as from idiosyncratic shocks. Progressive taxation compresses the (after-tax) wage structure, thereby distorting the incentives to accumulate human capital, in turn reducing the cross-sectional dispersion of (before-tax) wages. Illustrations. This is a print-on-demand publication; it is not an original.
Author: Sandra Black Youngblood
Publisher:
ISBN:
Category : Education
Languages : en
Pages : 64
Get Book Here
Book Description
Author: Dirk Van De Gaer
Publisher:
ISBN:
Category :
Languages : en
Pages : 64
Get Book Here
Book Description
Author: Mariacristina De Nardi
Publisher:
ISBN:
Category : Inheritance and transfer tax
Languages : en
Pages : 54
Get Book Here
Book Description
Author: John A. Bishop
Publisher: Emerald Group Publishing
ISBN: 1787564592
Category : Business & Economics
Languages : en
Pages : 328
Get Book Here
Book Description
Research on Economic Inequality, volume 26, primarily contains papers presented at the 8th Society for the Study of Economic Inequality (ECINEQ) meeting. The papers cover such topics as the effect of inheritance taxation on the "pre-distribution" of income, and tax progressivity under alternative inequality definitions.
Author: Lutz Hendricks
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
Get Book Here
Book Description
Recent estimates of the effects of tax reforms in the presence of human capital differ greatly. This paper examines which model features and parameter values are critical for the conclusions about the effects of tax changes. I find that the conflicting results of the previous literature are in large part due to implicit assumptions about intergenerational links that differ between life-cycle and infinite horizon models. A model that explicitly incorporates intergenerational links in human and physical capital reveals that neither conventional life-cycle models, which abstract from all intergenerational links, nor infinite horizon models, in which both types of capital are heritable, correctly predict the long-run and transitional effects of tax changes.
Author: Moiz Bhai
Publisher:
ISBN:
Category :
Languages : en
Pages : 0
Get Book Here
Book Description
Understanding the transmission of success from generation to the next remains a salient issue for public policy. The peacetime draft in the United States provides a large scale natural experiment to explore the impacts of an intensive policy intervention. Draftees incurred large wage penalties during and beyond their initial period of military service. Economists have consequently characterized the draft as a tax. Using an instrumental variables research design with data from the Wisconsin Longitudinal Study, the present study investigates the intergenerational human capital spillovers of the draft. I find the intergenerational costs of the draft for children of men that were drafted during peacetime to be two-thirds of a year less of schooling than children of men that were not drafted. Further analysis of the effects by the gender of children reveals considerably stronger impacts on boys than girls. In contrast, children of men from the whole military sample show a negligible impact of paternal military service on their educational attainment.
Author: Luca Stella
Publisher:
ISBN:
Category :
Languages : en
Pages : 47
Get Book Here
Book Description
