This paper considers how optimal education and tax policy depends on the risk properties of human capital. It is … positive or a negative education premium. In the same model a positive intertemporal wedge is optimal. Aset of generalizations …, including non-observability of education, non-observability of consumption, and temporal resolution of uncertainty, are then …

part through education. In addition to the customary externality source associated with a change in average fertility rate …) Investments in education of high- and low-ability parents must be subsidized, (ii) direct child subsidies to one or both parent … types can be negative; i.e., they can be taxes, (iii) net subsidies to children (direct child subsidies plus education …

Justification for policies to encourage investments in education, particularly for individuals at the lower end of the … potentially loss averse around their expected outcome make risky investments in education and we draw on optimal tax theory to … preferences, standard risk aversion and labour supply behaviour, (ii) the risk properties of education, and (iii) the degree of …