Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/284788 
Year of Publication: 
2021
Citation: 
[Journal:] Canadian Journal of Economics/Revue canadienne d'économique [ISSN:] 1540-5982 [Volume:] 54 [Issue:] 2 [Year:] 2021 [Pages:] 840-863
Publisher: 
Wiley, Hoboken, NJ
Abstract: 
This paper argues that it suffices to assume distortionary wage taxation to prove the efficiency of effective subsidization of education. The paper does not rely on considerations of equity and market failure to justify subsidies. Instead, the optimal subsidy reduces the social cost of distortive wage taxation. The theoretical approach assumes a Mincer‐type earnings function, analyzes corner solutions of optimal schooling choice and derives the result of efficient subsidization in a Ramsey‐type framework. Second‐best policy is confronted with empirical evidence from OECD countries. The majority of countries are shown to subsidize tertiary education in effective terms.
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article
Document Version: 
Published Version

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.