http://repub.eur.nl/res/aut/12646/ List of Publications en http://repub.eur.nl/static-eur/img/logo.png http://repub.eur.nl http://repub.eur.nl/res/pub/39378/ 2013-04-01T00:00:00Z This paper studies optimal linear and non-linear income taxes and education subsidies in two-type models with endogenous human capital formation, endogenous labor supply, and endogenous wage rates. Assuming constant human capital elasticities, human capital investment should be efficient under optimal linear policies, whether general equilibrium effects are present or not. Hence, education subsidies should not be used for distributional reasons. Due to general equilibrium effects, optimal linear income taxes may even become negative. Optimal non-linear policies exploit general equilibrium effects for redistribution. The high-skilled type optimally has a negative marginal income tax rate and a positive marginal education subsidy. The low-skilled type optimally faces a positive marginal income tax rate and a marginal tax on education. Simulations demonstrate that general equilibrium effects have only a modest effect on optimal non-linear policies. http://repub.eur.nl/res/pub/21922/ 2010-12-17T00:00:00Z Het gevoerde economische beleid bij de bankhervormingen en de budgettaire politiek is niet tijdsconsistent door aanhoudende ongeloofwaardigheid van overheidsoptreden. Verwachtingen van marktpartijen bepalen daardoor het overheidsbeleid, in plaats van andersom. De geloofwaardigheid van het gevoerde beleid moet worden vergroot om een exit uit de crisis goed te organiseren. http://repub.eur.nl/res/pub/21359/ 2010-01-01T00:00:00Z This paper analyzes optimal linear and non-linear taxes on capital and labor incomes in a life-cycle model of human capital investment, financial savings, and labor supply with heterogenous individuals. A dual income tax with a positive marginal tax rate on not only labor income but also capital income is optimal. The positive tax on capital income serves to alleviate the distortions of the labor tax on human capital accumulation. The optimal marginal tax rate on capital income is lower than that on labor income if savings are elastic compared to investment in human capital, substitution between verifiable and non-verifiable inputs in human capital formation is difficult, and most investments in human capital are verifiable so that education subsidies can directly reduce the tax wedge on learning. Numerical calculations suggest that the optimal marginal tax rate on capital income is substantial. http://repub.eur.nl/res/pub/15828/ 2009-04-01T00:00:00Z This paper bolsters Prescott's (Fed. Reserve Bank Minneap. Q. Rev. 28(1):2-13, 2004) claim that high taxes are responsible for lackluster labor market performance in Continental European countries. We develop a life-cycle model with endogenous skill formation, endogenous labor supply, and endogenous retirement. Labor taxation distorts not only labor supply, but also education and retirement decisions. Actuarially unfair pensions further exacerbate labor tax distortions on retirement. Education subsidies can nevertheless cushion the adverse impact of taxation on skill formation. Feedbacks between education, labor supply, and retirement are important. The model is simulated with realistic behavioral elasticities that are consistent with microeconometric evidence. If, besides labor supply, also learning and retirement are endogenous, the uncompensated (compensated) elasticity of the tax base equals 0.46 (0.85), which is more than twice as large as the standard uncompensated (compensated) labor supply elasticity of 0.18 (0.40). Furthermore, life-cycle interactions between education, working, and retirement are quantitatively important and the interactions raise all behavioral elasticities substantially. For example, the uncompensated labor supply elasticity increases with one-half due to life-cycle interactions (to 0.26). We demonstrate that low European labor supply can be fully explained by taxation without relying on unrealistically high labor supply elasticities. Reducing labor market distortions, cutting benefit levels, lowering tax rates, and making (early) retirement actuarially more fair, therefore, boosts labor supply, delays retirement, and stimulates skill formation. In addition, high education subsidies are needed in large welfare states to offset explicit and implicit tax burdens on human capital investment. http://repub.eur.nl/res/pub/17906/ 2009-01-01T00:00:00Z In a model with ex-ante homogenous households, earnings risk and a general earnings function, we derive the optimal linear labor tax rate and optimal linear education subsidies. The optimal income tax trades off social insurance against incentives to work and to invest in human capital. Education subsidies are not used for social insurance, but are only targeted at off-setting the distortions of the labor tax and internalizing a fiscal externality. Both optimal education subsidies and tax rates increase if labor and education are more complementary, since education subsidies indirectly lower labor tax distortions by stimulating labor supply. Optimal education subsidies (taxes) also correct non-tax distortions arising from missing insurance markets. Education subsidies internalize a positive (negative) fiscal externality if there is underinvestment (overinvestment) in education due to risk. Education policy unambiguously allows for more social insurance if education is a risky activity. However, if education hedges against labor market risk, optimal tax rates could be lower than without education subsidies. http://repub.eur.nl/res/pub/17983/ 2009-01-01T00:00:00Z This note develops a simple occupational choice model to examine three types of selection biases that may occur in empirically estimating the premium for uncertain wages. Individuals may select themselves into risky (wage-uncertain) jobs because they have (1) lower risk aversion, or (2) lower income risks, or (3) higher individual ability. We show that (1) gives no bias, (2) biases the OLS estimate of the risk-premium in a wage regression upward, and (3) yields a bias that analytically may be positive or negative, but empirically is more likely to be negative if our occupational choice model is correct. http://repub.eur.nl/res/pub/12410/ 2008-05-26T00:00:00Z Op maandag 26 mei 2008 aanvaardde prof.dr. Bas Jacobs het ambt van bijzonder hoogleraar Openbare financiën en economisch beleid in de Faculteit der Economische Wetenschappen, vanwege de Vereniging Trustfonds EUR. In zijn inaugurele rede De prijs van gelijkheid gaat hij op zoek naar de heilige graal van de welvaartseconomie: het vinden van de economisch meest efficiënte manieren om inkomen te verdelen. Na de plechtigheid overhandigde de kersverse hoogleraar het eerste exemplaar van de handelseditie van zijn oratie aan minister van Financiën Wouter Bos. Elk overheidsingrijpen gaat onvermijdelijk gepaard met ontwrichting van de efficiënte werking van de markt. Iedere euro die de overheid herverdeelt, kost de samenleving vijftig eurocent. Het realiseren van sociaal-economische gelijkheid heeft daarom een hoge prijs. Bas Jacobs stelt dat veel overheidsingrepen efficiënt noch rechtvaardig zijn. Op basis van de meeste recente wetenschappelijke inzichten betoogt hij dat de prijs van gelijkheid omlaag kan door veel doelmatiger te delen. Jacobs bespreekt onder andere de progressie van de inkomstenbelasting, belastingen op kapitaalinkomen, subsidies op hoger onderwijs, het minimumloon en de fiscale subsidies op het eigen huis en de pensioenen. Hij laat zien dat veel politieke opvattingen van zowel links als rechts op drijfzand zijn gebouwd. Tegelijkertijd prikt hij talloze proefballonnen door, zoals de ongenuanceerde pleidooien voor een vlaktaks, lagere erfenisbelastingen en de levensloopregeling. Eenhandelseditie van de oratie wordt uitgegeven bij Uitgeverij Bert Bakker: De prijs van gelijkheid, ISBN 978 90 351 3321 1 http://repub.eur.nl/res/pub/11768/ 2008-02-01T00:00:00Z http://repub.eur.nl/res/pub/17584/ 2008-01-01T00:00:00Z This paper explores how the specification of the earnings function impacts the optimal tax treatment of human capital. If education is complementary to labor effort, education should be subsidized to offset tax distortions on labor supply. However, if most of the education is enjoyed by high ability households, education should be taxed in order to redistribute resources to the poor. The paper identifies the exact conditions under which these two effects cancel and education should be neither taxed nor subsidized. In particular, with non-linear tax instruments, education should be weakly separable from labor and ability in the earnings function. With linear taxes, education should also feature a constant elasticity in a weakly separable earnings function. http://repub.eur.nl/res/pub/11770/ 2007-09-01T00:00:00Z This paper draws on Van Ewijk et al. (2006), which provides a more detailed analysis of subsidies on owner-occupied housing in the Netherlands and presents a number of scenarios for reform, and on Jacobs (2007), which provides a model underlying the welfare-economic analysis. http://repub.eur.nl/res/pub/12020/ 2006-01-01T00:00:00Z http://repub.eur.nl/res/pub/12021/ 2006-01-01T00:00:00Z We bespreken enkele welvaartsdividenden van het versoberen van de subsidie op de eigen woning. Deze dividenden doen zich in de eerste plaats voor op de woningmarkt. Daarnaast kan zich een welvaartsdividend voordoen op de arbeidsmarkt. De omvang van dit tweede dividend is evenwel sterk afhankelijk van de elasticiteit van het aanbod van woningen. http://repub.eur.nl/res/pub/6587/ 2005-04-05T00:00:00Z This paper analyzes optimal linear taxes on capital and labor incomes in a life-cycle model of human capital investment, financial savings, and labor supply with heteroge- nous individuals. A dual income tax with a positive marginal tax rate on not only labor income but also capital income is optimal. The positive tax on capital income serves to alleviate the distortions of the labor tax on human capital accumulation. The optimal marginal tax rate on capital income is lower than that on labor income if savings are elastic compared to investment in human capital; substitution between inputs in human capital formation is difficult; and most investments in human capital are verifiable. Numerical calculations suggest that the optimal marginal tax rate on capital income is close to the tax rate on labor income. http://repub.eur.nl/res/pub/11917/ 2003-01-01T00:00:00Z