In this paper we compute the optimal tax and education policy transition in an economy where progressive taxes provide social insurance against idiosyncratic wage risk, but distort the education decision of households. Optimally chosen tertiary education subsidies mitigate these distortions.
The probability of dropping out of high school varies considerably with parental education. Using a rich Canadian panel data set, we examine the channels determining this socioeconomic status effect.
We examine the extent to which tuition and needs-based aid policies explain important differences in the relationship between family income and post-secondary attendance relationships between Canada and the U.S.
We study efficient allocations and optimal policies in a Mirrleesean life-cycle economy with risky human capital accumulation and permanent ability differences. We assume that ability, labor supply, learning effort and returns to human capital are all private information of the agents.
Several frictions restrict the governments ability to tax assets. First of all, it is very costly to monitor trades on international asset markets.
Human capital is one of the largest assets in the economy and in theory may play an important role for asset pricing. Human capital is heterogeneous across investors. One source of heterogeneity is industry affiliation.
Is skill dispersion a source of comparative advantage? In this paper we use microdata from the International Adult Literacy Survey to show that the effect of skill dispersion on trade flows is quantitatively similar to that of the aggregate endowment of human capital.
We discuss a simple model in which parents and children make investments in the children's education and investments for other purposes and parents can transfer cash to their children.
We review studies of the impact of credit constraints on the accumulation of human capital. Evidence suggests that credit constraints are increasingly important for schooling and other aspects of households' behavior.
In a heterogeneous life cycle economy with human capital accumulation, the option to discharge student loans under a liquidation regime helps alleviate