Taxation in a dynamic general equilibrium model with human capital /
| Main Author: | |
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| Other Authors: | , , |
| Format: | Thesis Book |
| Language: | English |
| Published: |
1991.
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| Subjects: | |
| Online Access: | ProQuest, Abstract Link to OAKTrust copy |
| Abstract: | This study develops a dynamic general equilibrium model with endogenous human capital to examine the marginal allocative effects of income taxation. The model is parameterized to describe the effects of income taxes in the United States. Previous work in the analysis of taxation is extended using this general equilibrium model which includes human capital in a utility maximizing framework. The vast majority of earlier studies of taxation have ignored human capital, and the few studies which have included human capital have done so in a partial equilibrium or non-utility maximizing framework. The more general model developed here yields several new conclusions about the effects of income taxation, some of which overturn previous conclusions generated in the restrictive models used in earlier work. Three applications of the model are presented. First, the marginal effect of income taxation on human capital is examined. Income taxation is shown to have a significant negative impact on human capital investment, contrary to the conclusions of prior studies which used less general models. The second application examines the marginal effects of deficit finance. Delaying taxation through borrowing is shown to cause a significant negative impact on human capital accumulation, a result not previously examined. The third application presents new estimates of the marginal excess burden of taxation using this more general model, and several interesting results about the magnitude of tax distortions are found. The two main conclusions reached are: The marginal excess burden is noticeably higher when human capital is included because there is a distortion in the choice of human capital investments, a distortion which has not been analyzed previously. And, delayed income taxation through deficit finance imposes a larger efficiency cost than balanced budget taxation, but probably only slightly. |
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| Item Description: | Typescript (photocopy). Vita. "Major subject: Economics." |
| Physical Description: | xviii, 120 leaves : illustrations ; 29 cm |
| Bibliography: | Includes bibliographical references. |