Tax Policy and Returns to Education

Alison Booth, Melvyn G Coles

    Research output: Contribution to journalArticle

    Abstract

    This paper considers how asymmetric tax treatment, where labour market earnings are taxed but household production is untaxed, affects educational choice and labour supply. We show that taxes on labour market earnings can generate a large (non-marginal) switch to home production and the ensuing deadweight losses are large. Using a cross-country panel, we find that gender differences in labour supply responses to tax policy can explain differences in aggregate labour supply and years of education across countries.
    Original languageEnglish
    Pages (from-to)291-301
    JournalLabour Economics
    Volume17
    Issue number1
    DOIs
    Publication statusPublished - 2010

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