Human capital and optimal redistribution

We characterize optimal redistribution in a dynastic family model with human capital. We show how a government can improve the trade-off between equality and incentives by changing the amount of observable human capital.
We characterize optimal redistribution in a dynastic family model with human capital. We show how a government can improve the trade-off between equality and incentives by changing the amount of observable human capital. We provide an intuitive decomposition for the wedge between human-capital investment in the laissez faire and the social optimum. This wedge differs from the wedge for bequests because human capital carries risk: its returns depend on the non-diversi…able risk of children's ability. Thus, human capital investment is encouraged more than bequests in the social optimum if human capital is a bad hedge for consumption risk.
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Metadaten
Author:Winfried Koeniger, Julien Prat
URN:urn:nbn:de:hebis:30:3-356112
Parent Title (English):Center for Financial Studies (Frankfurt am Main): CFS working paper series ; No. 497
Series (Serial Number):CFS working paper series (497)
Publisher:Center for Financial Studies
Place of publication:Frankfurt, M.
Document Type:Working Paper
Language:English
Year of Completion:2014
Year of first Publication:2014
Publishing Institution:Universitätsbibliothek Johann Christian Senckenberg
Release Date:2014/11/25
Issue:November 2014
Pagenumber:52
HeBIS PPN:351114343
Institutes:Wirtschaftswissenschaften
Center for Financial Studies (CFS)
Dewey Decimal Classification:330 Wirtschaft
JEL-Classification:E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital (Updated!)
H21 Efficiency; Optimal Taxation
I22 Educational Finance
J24 Human Capital; Skills; Occupational Choice; Labor Productivity
Sammlungen:Universitätspublikationen
Licence (German):License Logo Veröffentlichungsvertrag für Publikationen

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