Booth, AL and Coles, M (2007) The Impact Of Fiscal Policy On Labor Supply And Education In An Economy With Household And Market Production. UNSPECIFIED. CAMA Working Papers.
Booth, AL and Coles, M (2007) The Impact Of Fiscal Policy On Labor Supply And Education In An Economy With Household And Market Production. UNSPECIFIED. CAMA Working Papers.
Booth, AL and Coles, M (2007) The Impact Of Fiscal Policy On Labor Supply And Education In An Economy With Household And Market Production. UNSPECIFIED. CAMA Working Papers.
Abstract
This paper considers optimal educational investment and labour supply with increasing returns to scale in the earnings function. In so doing we develop the work of Rosen (1983), who first highlighted the increasing returns argument that arises because private returns to human capital investment are increasing in subsequent utilization rates. We demonstrate that increasing returns generates task specialisation - individuals choose to become either home specialists or work specialists. With heterogeneous workers, we show for certain types, that a tax on labour income leads to large, non-marginal substitution effects; i.e. those with a comparative advantage in home production are driven out of the market sector. Tax deadweight losses are consequently large. Consistent with the theory, our empirical results, using a cross-country panel, find that gender differences in labour supply responses to tax policy can play an important role in explaining differences in aggregate labour supply across countries.
Item Type: | Monograph (UNSPECIFIED) |
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Subjects: | H Social Sciences > HB Economic Theory |
Divisions: | Faculty of Social Sciences Faculty of Social Sciences > Economics, Department of |
SWORD Depositor: | Unnamed user with email elements@essex.ac.uk |
Depositing User: | Unnamed user with email elements@essex.ac.uk |
Date Deposited: | 18 Jul 2012 17:45 |
Last Modified: | 16 May 2024 18:16 |
URI: | http://repository.essex.ac.uk/id/eprint/3112 |