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The challenge of a rising skill premium for redistributive taxation

Bjorvatn, Kjetil; Cappelen, Alexander W.
Working paper
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URI
http://hdl.handle.net/11250/163040
Date
2007-02
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  • Discussion papers (SAM) [676]
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 Economics
Series
Discussion paper
2007:9

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