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dc.contributor.authorKapiĉka, Marek
dc.contributor.authorNeira, Julian
dc.date.accessioned2016-03-07T09:22:22Z
dc.date.issued2015
dc.description.abstractWe study optimal tax policies in a life-cycle economy with risky human capital and permanent ability differences, where both ability and learning effort are private information of the agents. The optimal policies balance several goals: redistribu- tion across agents, insurance against human capital shocks, incentives to accumulate human capital, and incentives to work. We show that, in the optimum, i) if util- ity is separable in labor and learning effort, the inverse marginal labor income tax rate follows a random walk, ii) the “no distortion at the top” result does not ap- ply if discouraging labor supply increases incentives to invest in human capital, and iii) quantitatively, high-ability agents face very risky consumption in order to elicit learning effort while low-ability agents are insured. We also find large welfare gains for the U.S. from switching to an optimal tax system.en_GB
dc.identifier.citation2015en_GB
dc.identifier.urihttp://hdl.handle.net/10871/20509
dc.language.isoenen_GB
dc.publisherUniversity of Exeteren_GB
dc.relation.urlhttp://papers.ssrn.com/sol3/papers.cfm?abstract_id=2700607en_GB
dc.relation.urlhttp://hdl.handle.net/10871/37955
dc.titleOptimal taxation with risky human capital (working paper)en_GB
dc.typeWorking Paperen_GB
dc.date.available2015-10-18
dc.date.available2016-03-07T09:22:22Z
dc.identifier.issn1473-3307
dc.descriptionThe journal article version of this paper is in ORE: http://hdl.handle.net/10871/37955
dc.identifier.journalEconomics Department Discussion Papers Seriesen_GB


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