Should I Stay (in School) or Should I Go (to Work)

被引:0
作者
Tyrrell-Hendry, Lee [1 ]
机构
[1] Univ Bath, Dept Econ, Bath, England
关键词
Macroeconomics; Public economics; Education; EDUCATION SUBSIDIES; INTERGENERATIONAL TRANSFERS; INCOMPLETE MARKETS; CREDIT CONSTRAINTS; INCOME TAXATION; INSURANCE; RETURNS; RISK; ECONOMY; TAX;
D O I
10.1016/j.jpubeco.2024.105226
中图分类号
F [经济];
学科分类号
02 ;
摘要
I explore optimal education subsidies and progressivity of labour taxes in a model with stochastic human capital accumulation and incomplete markets, endogenous labour supply and an education choice modelled as a real option, where agents choose an optimal number of years to study before starting work. In a purely analytical Baseline model with tight borrowing constraints on students, which leads to a no-trade equilibrium without savings, the government pays for education via transfers to students or - equivalently - via grants to universities. The social welfare-maximising policy features generous education subsidies and highly progressive labour taxes, much more so than currently seen in the US or Europe, and results in an average consumption- equivalent gain of 8%. This result is robust to myriad extensions, including a Quantitative model with relaxed financial frictions where students can borrow to finance their education, and where hence the equilibrium features extensive precautionary saving by workers.
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页数:17
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