We found a match
Your institution may have access to this item. Find your institution then sign in to continue.
- Title
ESTATE TAXATION AND HUMAN CAPITAL WITH INFORMATION EXTERNALITIES.
- Authors
Hedlund, Aaron
- Abstract
This paper investigates the effects of estate taxation when firms cannot directly observe worker skill levels. Imperfect labor market signaling gives rise to an information externality that causes workers to free-ride off of others' human capital acquisition. Inherited wealth exacerbates the information externality because risk averse workers with larger inheritances exert less effort to acquire skills. By reducing these inheritances, an estate tax induces greater skill acquisition effort and increases the number of skilled workers. In a quantitative model with employer learning and capital accumulation, the optimal estate tax is significantly above zero, increases wages and output, and benefits a large majority of households.
- Subjects
CAPITAL levy; INHERITANCE &; transfer tax; HUMAN capital; EXTERNALITIES; LABOR market
- Publication
Macroeconomic Dynamics, 2020, Vol 24, Issue 3, p568
- ISSN
1365-1005
- Publication type
Article
- DOI
10.1017/S1365100518000366