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- Title
BEYOND EDUCATION AND FAIRNESS: A LABOR MARKET TAXATION MODEL FOR THE GREAT GATSBY CURVE.
- Authors
Lefgren, Lars; McIntyre, Frank; Sims, David P.
- Abstract
Applied researchers have been drawn to models that attribute the demonstrated cross-country differences in intergenerational income transmission to government failures to invest in the human capital of poor children. To highlight another potential mechanism, the disincentive effects of labor market taxation and redistribution, we present a simple model that can explain cross-country differences in intergenerational mobility and other previously observed empirical patterns. Empirical tests using data on income mobility, tax rates, and public expenditures largely support the model predictions. We conclude that the common presumption that intergenerational mobility largely measures fairness or opportunity, and the resultant policy recommendations, are premature. ( JEL D31, J24, J62)
- Subjects
INTERGENERATIONAL mobility; HUMAN capital; PUBLIC investments; EQUALITY policy; ECONOMIC mobility; KRUEGER, Alan B., 1960-2019; INCOME tax policy; EDUCATIONAL finance; GOVERNMENT policy
- Publication
Economic Inquiry, 2015, Vol 53, Issue 2, p962
- ISSN
0095-2583
- Publication type
Article
- DOI
10.1111/ecin.12185