When employees leave an organisation, they take their human capital with them. They also take with them any investment that the training organisation may have done to enhance their human capital, both in terms of firm-specific and general skills. Employee turnover is the main cause of the...

Should a redistributive government optimally subsidize education to provoke a reduction in the skill premium through general equilibrium effects on wages? To answer this question, this paper studies optimal linear and non-linear redistributive income taxes and education subsidies in two-type...