How Do Taxes Affect Human Capital? The Role of Intergenerational Mobility

Lutz Hendricks
1999 Social Science Research Network  
This paper investigates how explicitly modeling the intergenerational transmission of human capital modifies the effects of tax policies obtained from standard lifecycle models. The main finding is that the intergenerational persistence of human capital is not an important determinant of the steady-state and transitional effects of several commonly studied tax policies. Conventional life-cycle models closely approximate the predictions generated by models with realistic intergenerational
more » ... y properties. However, intergenerational persistence can substantially magnify the effects of policies that distort job training investment. Journal of Economic Literature Classification Numbers: H2, J24.
doi:10.2139/ssrn.185389 fatcat:7gninel7z5hdfg2ziquwzb2oay