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12:30 - 13:45 27 April 2015

Designing Efficient College and Tax Policies

Location

IFS Seminar Room | Institute for Fiscal Studies (link Map)
7 Ridgmount Street | London | WC1E 7AE | United Kingdom

Open to: Academic | Student
Ticketing: Open

Speaker information

Sebastian Findeisen, University of Mannheim

The total social benefits of college education exceed the private benefits because the government receives a share of the monetary returns in the form of income taxes. We study the policy implications of this fiscal externality in an optimal dynamic tax framework. Using a variational approach we derive a formula for the revenue effect of an increase in college education subsidies and an expression for the excess burden of income taxation caused by the college margin. We also study optimal nonlinear income taxation and show that optimal taxes are typically smaller because of the college margin. Our model addresses several important dimensions raised by structural labor economists: multidimensional heterogeneity, idiosyncratic risk and borrowing constraints. The model matches key empirical results on college enrollment patterns, returns to education and enrollment elasticities.


Contact

Institute for Fiscal Studies
020 7291 4800


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