Optimal Taxation and Education Subsidies
| Project Start: | 09/2016 |
| Status: | Completed |
| Researchers: | Fabian Becker, Dirk Krueger, Alexander Ludwig, Faisal Sohail |
| Category: | Macro Finance |
| Funded by: | LOEWE |
This project was part of the DFG project "Trends in Inequality: Sources and Policy (TRISP)"
Topic & Objectives
Characterization of optimal mix between early (primary school) and late (secondary school) education subsidies, subsidies to higher education and progressive income taxation in a quantitative macro public finance model with endogenous education choices and human capital investment decisions by parents into their children.
Key Findings
Optimal policy in the US is characterized by higher non-tertiary and tertiary education subsidies. There exists a strong complementarity between these instruments. Thus, welfare effects of tertiary education subsidies increase if non-tertiary education subsidies are in place.
Policy Implications
Education financing in the US should be more European.
Related Working Papers
| No. | Author/s | Title | Year | Program Area | Keywords |
|---|---|---|---|---|---|
| 201 | Dirk Krueger, Alexander Ludwig | Optimal Taxes on Capital in the OLG Model with Uninsurable Idiosyncratic Income Risk | 2018 | Macro Finance | Idiosyncratic Risk, Taxation of Capital, Overlapping Generations, Precautionary Saving, Pecuniary Externality |
| 110 | Dirk Krueger, Philipp Krüger, Alexander Ludwig | On the Optimal Provision of Social Insurance | 2015 | Macro Finance | Progressive Taxation, Education Subsidy, Transitional Dynamics |
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