The challenge of a rising skill premium for redistributive taxation
Working paper
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Date
2007-02Metadata
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- Discussion papers (SAM) [663]
Abstract
The present paper analyses the challenge to redistribution programs
posed by an increase in skill premium. The increase in skill
premium, which we observe in most OECD countries, affects taxation
through its effect on education and migration incentives. We demonstrate
that in countries with a relatively egalitarian wage distribution,
the response to an increased gap in wages is likely to be increased
redistributive taxation, whereas the response in countries with a more
inegalitarian pre-tax income distribution, is likely to be a reduction in taxation and redistribution.
Publisher
Norwegian School of Economics and Business Administration. Department of EconomicsSeries
Discussion paper2007:9