affects employment, wage inequality, public expenditures, and aggregate income in the low-wage sector. It is shown that a … statutory minimum wage of EUR 7.50 per hour would cost 840,000 low-paid jobs and increases the fiscal burden by about EUR 4 … billion per year, while household income rises only by EUR 1.1 billion per year. Poor households, i.e. those eligible for …

standard human capital model. A flat income tax remains neutral if education expenditures are fully deductible …

linear labor tax rate and optimal linear education subsidies. The optimal income tax trades off social insurance against …

depends on individual effort in education and public resources, but educational risk still causes (income) inequality. We show … funding of the educational sector. We argue that improved educational opportunities matter more than direct income transfers … in a Second-best setting. Contrary to standard models of income risk, it is not optimal to use a proportional wage tax …