We develop a model of education where individuals face educational risk. Successfully entering the skilled labor sector … depends on individual effort in education and public resources, but educational risk still causes (income) inequality. We show … in a Second-best setting. Contrary to standard models of income risk, it is not optimal to use a proportional wage tax …

which individuals face educational risk and wage dispersion across two types of skills. Successful graduation and working as … a skilled worker depends on individual effort in education and on public resources, but educational risk still causes …

This paper considers how optimal education and tax policy depends on the risk properties of human capital. It is … demonstrated that a key feature of human capital investments is whether they increase or decrease wage risk. In a benchmark model …

of the word, the government’s agents. They are agents also in the sense of Principal-Agent theory if the parental action …

A strictly risk-averse individual with an exogenous gross income in period one can acquire human capital in the same …

In a model with ex-ante homogenous households, earnings risk and a general earnings function, we derive the optimal … (overinvestment) in education due to risk. Education policy unambiguously allows for more social insurance if education is a risky … activity. However, if education hedges against labor market risk, optimal tax rates could be lower than without education …