Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/296672 
Year of Publication: 
2022
Series/Report no.: 
UCD Centre for Economic Research Working Paper Series No. WP22/26
Publisher: 
University College Dublin, UCD School of Economics, Dublin
Abstract: 
This paper studies the effect of income tax progressivity on the disproportionate usage of publicly funded higher education. We develop a rational choice model showing that more progressive tax systems increase poorer households' net fiscal benefit, making their children more likely to attend university. The model also shows that weakly progressive tax systems can determine a "perverse redistribution", in which poorer households subsidize the higher education for richer households. With this model, we develop three empirically testable hypotheses, where (i) countries with higher levels of progressivity have higher enrollment rate in higher education; (ii) the parental income gradient in children's higher education attendance is lower in countries with more progressive tax systems; and (iii) countries with more progressive tax systems have a lower perverse redistribution in higher education. The model also analyzes the role of local progressivity in higher education choice and redistribution. We provide empirical validation for our model's conclusions across European-OECD countries.
Subjects: 
Public Higher Education
Progressive Income Tax
University Choice
Inequality
JEL: 
I23
H41
H31
H24
Document Type: 
Working Paper

Files in This Item:
File
Size
559.58 kB





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