Efficient progressivity when an education system sustains long-run growth

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dc.contributor.author Bandyopadhyay, Debasis en
dc.contributor.author Tang, X en
dc.coverage.spatial San Diego, California, USA en
dc.date.accessioned 2017-07-25T23:49:24Z en
dc.date.issued 2017-06-25 en
dc.identifier.citation Western Economic Association International 92nd Annual Conference, San Diego, California, USA, 25 Jun 2017 - 29 Jun 2017. 32 pages. 25 Jun 2017 en
dc.identifier.uri http://hdl.handle.net/2292/34504 en
dc.description.abstract Can an e¤ective education system substitute a redistributive policy, if the sys- tem also promotes e¢ ciency with equity to foster long-run growth? The question seems relevant for contemporary politics. Yet few have addressed it. Therefore, we reexamine the e¢ ciency of redistribution with a progressive income tax or edu- cation nance, adding to the seminal work of Benabou (2002), by considering the impact of knowledge externality, from the atmospheric presence of the education system, on private returns to schooling. Under the popular income tax scheme, the e¢ cient progressivity that maximizes the long-run growth rate of per capita in- come typically varies in an inverted U-shape if the endogenous growth comes from a greater share of knowledge externality vis-à-vis the elasticity of private expenditure in education. Under both schemes, e¢ cient progressivity turns from positive to zero as the education system s e¤ectiveness in knowledge gathering from contemporary educators exceeds a threshold which, however, decreases as the relative contribu- tion of knowledge externality to endogenous growth increases. Numerically, we nd that, for the baseline US economy, the e¢ cient progressivity turns out to be zero under the income tax scheme without an education subsidy and about 37.5% un- der a consumption tax-based education nance scheme with a progressive education subsidy, coupled with instruments to o¤set the distortionary impact of progressivity on saving. en
dc.description.uri http://www.weai.org/Content/Files/Prelim-Prog.pdf en
dc.relation.ispartof Western Economic Association International 92nd Annual Conference en
dc.rights Items in ResearchSpace are protected by copyright, with all rights reserved, unless otherwise indicated. Previously published items are made available in accordance with the copyright policy of the publisher. en
dc.rights.uri https://researchspace.auckland.ac.nz/docs/uoa-docs/rights.htm en
dc.title Efficient progressivity when an education system sustains long-run growth en
dc.type Conference Item en
pubs.finish-date 2017-06-29 en
pubs.start-date 2017-06-25 en
dc.rights.accessrights http://purl.org/eprint/accessRights/RestrictedAccess en
pubs.subtype Conference Paper en
pubs.elements-id 623828 en
pubs.org-id Business and Economics en
pubs.org-id Economics en
pubs.record-created-at-source-date 2017-04-30 en
pubs.online-publication-date 2017-06-29 en

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