It is an overarching and persistent fact that job creation in the Indian manufacturing sector has fallen short of the growth in the workforce. The successive governments since 2009 onwards have attempted to initiate policies to enhance the growth in employment along with quality of jobs in the...

This paper explores how the specification of the earnings function impacts the optimal tax treatment of human capital. If education is complementary to labor effort, education should be subsidized to offset tax distortions on labor supply. However, if most of the education is enjoyed by high...

In a model with ex-ante homogenous households, earnings risk and a general earnings function, we derive the optimal linear labor tax rate and optimal linear education subsidies. The optimal income tax trades off social insurance against incentives to work and to invest in human capital....

This paper builds upon Cunha's (2015) subjective rationality model in which parents have a subjective belief about the impact of their investment on the early skill formation of their children. We propose that this subjective belief is determined in part by locus of control (LOC), i.e., the...

Over the last two decades Mexico has had an open trade regime, experienced macroeconomic stability, and made substantial progress in education. However, average workers¿ earnings have stagnated and earnings for workers with more schooling have declined, compressing the earnings distribution and...

We comment on the work of Hanushek et al. (2015) and show that returns to skills are very heterogeneous and depend crucially on the tasks performed in the workplace, in line with the critique by Acemoglu and Autor (2011). Depending on the type of tasks performed at work, as well as on...