Tax policy and returns to education

A. L. Booth, M. 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 (US)
Pages (from-to)291-301
Number of pages11
JournalLabour Economics
Volume17
Issue number1
DOIs
StatePublished - 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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