Mobility and the role of education as a commitment device

In closed economies, human capital investment faces a hold-up problem of excessive redistributive taxation. Increased international labor mobility, however, changes the constraints which affect optimal education and tax policy. We show that in a non-altruistic, gerontocratic world, investments in hu...

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Bibliographic Details
Published in:International tax and public finance 2003-09, Vol.10 (5), p.549-564
Main Authors: Thum, Claudio, Uebelmesser, Silke
Format: Article
Language:English
Subjects:
Abwanderung
Altruism
Bildungsinvestition
Bindung
Capital investments
Economic policy
Education
Education policy
Finance
Finanzierung
Fiscal policy
Generationenbeziehung
Generations
Human capital
Incentives
Investition
Investment
Labour mobility
Migration
Occupational mobility
Productivity
Skills
Standortfaktor
Steuer
Studies
Tax rates
Taxation
Taxes
Theorie
Transfer
Zuwanderung
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Summary:In closed economies, human capital investment faces a hold-up problem of excessive redistributive taxation. Increased international labor mobility, however, changes the constraints which affect optimal education and tax policy. We show that in a non-altruistic, gerontocratic world, investments in human capital which increase the mobility of the young generation can be interpreted as a commitment device overcoming the hold-up problem. This is in line with Kehoe (1989) who derives a similar result with respect to capital mobility. Copyright 2003 by Kluwer Academic Publishers
ISSN:0927-5940
1573-6970
DOI:10.1023/A:1026170206971