Tax policy and returns to education

A. L. Booth; M. G. Coles

doi:10.1016/j.labeco.2009.03.005

Tax policy and returns to education

A. L. Booth, M. G. Coles

Economics

Research output: Contribution to journal › Article › peer-review

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 language	English (US)
Pages (from-to)	291-301
Number of pages	11
Journal	Labour Economics
Volume	17
Issue number	1
DOIs	https://doi.org/10.1016/j.labeco.2009.03.005
State	Published - Jan 2010

Keywords

Education
Gender
Increasing returns
Labour supply
Tax policy

ASJC Scopus subject areas

Economics and Econometrics
Organizational Behavior and Human Resource Management

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10.1016/j.labeco.2009.03.005

Cite this

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title = "Tax policy and returns to education",

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.",

keywords = "Education, Gender, Increasing returns, Labour supply, Tax policy",

author = "Booth, {A. L.} and Coles, {M. G.}",

note = "Funding Information: Helpful comments were received from Fabien Postel-Vinay and two anonymous referees. An earlier version of this paper was presented at the June 2007 Meetings of the Society of Labor Economists and the September 2007 meetings of the European Association of Labour Economists. We are grateful to the ARC for financial support under Discovery Project Grant No. DP0556740. We also thank Florence Jaumotte for providing access to her OECD tax database, Hiau Joo Kee for excellent data assistance, and Patricia Apps, Bas Jacobs and Ian Walker for their helpful comments. ",

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Tax policy and returns to education

Abstract

Keywords

ASJC Scopus subject areas

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