Taxing Education in Ramsey’s Tradition

Assuming a two-period model with endogenous choices of labour, education, and saving, it is shown to be second-best efficient to deviate from Ramsey's Rule and to distort qualified labour less than nonqualified labour. The result holds for arbitrary utility and learning functions. Efficient incentives for education and saving are analysed under conditions of second and third best. It is argued that efficient tax policy should care more about incentives for education than for saving

Model Selection Approach Suggests Causal Association between 25-Hydroxyvitamin D and Colorectal Cancer

Vitamin D deficiency has been associated with increased risk of colorectal cancer (CRC), but causal relationship has not yet been confirmed. We investigate the direction of causation between vitamin D and CRC by extending the conventional approaches to allow pleiotropic relationships and by explicitly modelling unmeasured confounders.Plasma 25-hydroxyvitamin D (25-OHD), genetic variants associated with 25-OHD and CRC, and other relevant information was available for 2645 individuals (1057 CRC cases and 1588 controls) and included in the model. We investigate whether 25-OHD is likely to be causally associated with CRC, or vice versa, by selecting the best modelling hypothesis according to Bayesian predictive scores. We examine consistency for a range of prior assumptions.Model comparison showed preference for the causal association between low 25-OHD and CRC over the reverse causal hypothesis. This was confirmed for posterior mean deviances obtained for both models (11.5 natural log units in favour of the causal model), and also for deviance information criteria (DIC) computed for a range of prior distributions. Overall, models ignoring hidden confounding or pleiotropy had significantly poorer DIC scores.Results suggest causal association between 25-OHD and colorectal cancer, and support the need for randomised clinical trials for further confirmations

Education Mismatch, Human Capital and Labour Status of Young People Across European Union Countries

This paper analyses the influence of country-level education mismatch on the individual-level relationship between education and the probability of being unemployed or staying in alternative labour statuses, for young people aged 15-34 in 2006, 2008 and 2010, living in 21 EU countries. We assume that young people may fall in five labour market statuses: 1) Employee; 2) Self-employed; 3) Unemployed; 4) In Education; 5) Inactive, and perform a multinomial logit model to study the effects of years of education on relative probability of being in labour statuses 2, 3, 4, or 5, compared to the base category (Employee). Afterwards, we interact the individual-level years of education with a country-level indicator of education mismatch in order to identify the heterogeneous effects of the aggregate mismatch among people with different educational attainments. Results show that more years of education: i) reduce the relative probability of being unemployed; ii) have a cumulative effect by extending the period of education; iii) slightly raise the relative probability to be self-employed. As regards country-level education mismatch, we found that only after 2008 it produces an additional effect on better educated young people by further reducing their relative unemployment risk when it is compared to that of low educated youngsters. This outcome tells us that improving access to university degrees remains the main road to tackle youth unemployment caused by education mismatch, even after the outburst of the current financial and economic crisis

How Well Does a Cash-Flow Tax on Wages Approximate an Economic Income Tax on Labor Income?

The recent German discussion has witnessed increasing interest in the Dual Income Tax. The analysis of its merits, as opposed to those of a comprehensive income tax, is usually conducted with the main argument of the increasing mobility of financial capital in mind. This article pursues an alternative route of reasoning, arguing that the composition of the tax base of labor income entails a differentiation of the tax rates on capital and labor income. The time effect inherent in this dualism causes allocational distortions of unknown magnitude. It is modeled employing effective tax rates. The extent of the divergence is determined empirically, using German cross-sectional data from the 2004 wave of the Socio-Economic Panel. The uneven distribution of this advantage across differently educated brackets of society is uncovered. The paper concludes with proposals to remedy the situation and a tentative endorsement of the Dual Income Tax

Women, Schooling, and Marriage in Rural Philippines

Using data from the Bicol region of the Phillipines, we examine why women are more educated than men in a rural, agricultural economy in which women are significantly less likely than men to participate in the labor market. We hypothesize that educational homogamy in the marriage market and cross-productivity effects in the household allow Filipino women to reap substantial benefits from schooling regardless of whether they enter the labor market. Our estimates reveal that the return to schooling for women is approximately 20 percent in both labor and marriage markets. In comparison, men experience a 12 percent return to schooling in the labor market. By using birth order, sibship size, percent of male siblings, and parental education as instruments, we correct for a significant downward bias that is caused by the endogeneity of schooling attainment