This paper develops an overlapping generations model with heterogeneous (skilled versus unskilled) agents to analyze skill choice and dynamic efficiency of the steady-state equilibrium. Those adults sacrificing working time for skill training become skilled workers, while those adults not...

In a second-best optimal growth setup with only factor taxes, it is in general optimal to fully replace capital by labor income taxation in the long run. We revisit this important issue by developing a human capital-based endogenous growth model with frictional labor search, allowing each firm...

In a second-best optimal growth setup with only factor taxes, it is in general optimal to fully replace capital by labor income taxation in the long run. We revisit this important issue by developing a human capital-based endogenous growth model with frictional labor search, allowing each firm...