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Title: The Impact of Taxes and Transfers on Skill Premium
Authors: Takahashi, Shuhei  kyouindb  KAKEN_id
Yamada, Ken
Keywords: Skill premium
capital-skill complementarity
incomplete markets
capital income taxation
composition effect
Issue Date: Aug-2017
Publisher: Institute of Economic Research, Kyoto University
Journal title: KIER Discussion Paper
Volume: 976
Start page: 1
End page: 36
Abstract: The level of wage inequality has varied across advanced industrial countries. One of the main reasons has been a significant difference in the skill wage premium. This paper analyzes the impact of taxes and transfers on skill premium and social welfare in a heterogeneous-agents incomplete-markets model, extended to allow for capital-skill complementarity. Our analysis shows that a significant fraction of the difference in the skill wage premium between the United States and Japan can be attributed to the difference in the tax rate on capital income.
Description: Revised: October 2018
Appears in Collections:KIER Discussion Paper (English)

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