Mobility and the Role of Education as a Commitment Device |
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Authors: | Claudio Thum Silke Uebelmesser |
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Affiliation: | (1) CESifo, (University of Munich & Ifo Institute), Poschingerstr. 5, 81679 Munich, Germany |
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Abstract: | In closed economies, human capital investment faces a hold-up problem of excessive redistributive taxation. Increased international labor mobility, however, changes the constraints which affect optimal education and tax policy. We show that in a non-altruistic, gerontocratic world, investments in human capital which increase the mobility of the young generation can be interpreted as a commitment device overcoming the hold-up problem. This is in line with Kehoe (1989) who derives a similar result with respect to capital mobility. |
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Keywords: | education intergenerational transfers commitment |
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