Optimal taxation in the Uzawa-Lucas Model with externality in human capital

• Arantza Gorostiaga ^[1] ; Jana Hromcová Biela ^[2] ; Miguel Ángel López García ^[2]
  1. [1] Universidad del País Vasco/Euskal Herriko Unibertsitatea

     Universidad del País Vasco/Euskal Herriko Unibertsitatea

     Leioa, España

     
  2. [2] Universitat Autònoma de Barcelona

     Universitat Autònoma de Barcelona

     Barcelona, España

     
• Localización: Working papers = Documentos de trabajo: Serie AD, Nº. 19, 2011, págs. 1-18
• Idioma: inglés
• Enlaces
  • Texto completo (pdf)
• Resumen

  • We show that in the Uzawa-Lucas model with externality in human capital with agents that value both consumption and leisure, the government pursuing the first best can achieve its goal by subsidizing the foregone earnings while studying. The subsidy should be financed by a schooling fee. We obtain that countries with similar initial conditions may issue different fees because multiple equilibria can arise for empirically plausible values of parameters. This result differs from the one obtained in ananalogous economy where agents only value consumption.