Endogenous Selection of Comparison Groups, Human Capital Formation, and Tax Policy

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Dateien:
Aufrufstatistik

URI: http://nbn-resolving.de/urn:nbn:de:bsz:21-opus-55943
http://hdl.handle.net/10900/47840
Dokumentart: ResearchPaper
Date: 2011
Source: University of Tübingen Working Papers in Economics and Finance ; 3
Language: English
Faculty: 6 Wirtschafts- und Sozialwissenschaftliche Fakultät
Department: Wirtschaftswissenschaften
DDC Classifikation: 330 - Economics
Keywords: Humankapital
Other Keywords:
Human capital formation , Skill levels as occupational groups , Interpersonal comparisons , Relative deprivation , Tax policy , Subsidization
License: Publishing license excluding print on demand
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Abstract:

This paper considers a setting in which the acquisition of human capital entails a change of location in social space that causes individuals to revise their comparison groups. Skill levels are viewed as occupational groups, and moving up the skill ladder by acquiring additional human capital, which in itself is rewarding, leads to a shift in the individual’s inclination to compare himself with a different, and on average better-paid, comparison group, which in itself is penalizing. The paper sheds new light on the dynamics of human capital formation, and suggests novel policy interventions to encourage human capital formation in the aggregate and, at the same time, reduce inter-group income inequality.

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