Optimal Educational Choice and Redistribution when Parental Education Matters

Date

2002

Authors

Del Rey, Elena
Racionero, Maria

Journal Title

Journal ISSN

Volume Title

Publisher

Oxford University Press

Abstract

Higher education plays an important role in determining lifetime earnings. In turn, the decision to become educated depends to a large extent on family characteristics, such as wealth and education. In this paper, we focus on the interaction between fiscal policies and educational choices when parental education matters. We derive optimality conditions for a linear income tax and a lump-sum subsidy for education in a dynamic framework in which generations are linked by educational background. The factors that determine their sign and magnitude include concerns for redistribution, efficiency, and the educational externality on future generations.

Description

Keywords

Keywords: decision making; education; fiscal policy; income

Citation

Source

Oxford Economic Papers

Type

Journal article

Book Title

Entity type

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License Rights

DOI

Restricted until

2037-12-31