TY - UNPB

T1 - Going for growth: overeducation in a tax competition game

AU - Johnes, G

PY - 2002

Y1 - 2002

N2 - A model of international tax competition is developed in which taxes are raised in order to finance education which in turn raises income. It is shown that, in contrast to results from the tax competition literature, the outcome of a non-cooperative game can be to raise the tax rate, with the result that investment in education exceeds that which is globally socially optimal. This provides an explanation for the tendency for countries to emphasise growth as an objective in spite of what empirical studies tell us about the impact of income on happiness; it also identifies a new type of overeducation.

AB - A model of international tax competition is developed in which taxes are raised in order to finance education which in turn raises income. It is shown that, in contrast to results from the tax competition literature, the outcome of a non-cooperative game can be to raise the tax rate, with the result that investment in education exceeds that which is globally socially optimal. This provides an explanation for the tendency for countries to emphasise growth as an objective in spite of what empirical studies tell us about the impact of income on happiness; it also identifies a new type of overeducation.

KW - growth

KW - overeducation

KW - tax competition

KW - income distribution

KW - international social welfare function

M3 - Working paper

T3 - Economics Working Paper Series

BT - Going for growth: overeducation in a tax competition game

PB - The Department of Economics

CY - Lancaster University

ER -