Money or Joy

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Money or Joy

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Title: Money or Joy
The Choice of Educational Type
Author: Alstadsæter, Annette; Kolm, Ann-Sofie; Larsen, Birthe
Abstract: This paper examines the effect of taxes on the individuals' choices of educational direction, and thus on the economy.s skill composition. A proportional labour tax induces too many workers with high innate ability to choose an educational type associated with high consumption value and low effort. This increases the skill mismatch and aggregate unemployment in the economy. The government can correct for this distortion by use of differentiated tuition fees or tax rates. JEL codes: J64, J68, H21, H24 Keywords: Unemployment, matching, education, optimal taxation, tuition fees
URI: http://hdl.handle.net/10398/7562
Date: 2005-12-01
Notes: Version: November 28, 2005

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