The paper studies the effect that skilled labour mobility has on efficient education policy. The model is one of two periods in which a representative taxpayer decides on labour, education, and saving. The government can only use linear tax and subsidy instruments. It is shown that the mobility...

Biographical note: KaplowLouis: Louis Kaplow is the Finn M. W. Caspersen and Household International Professor of Law and Economics at Harvard, a research associate at the National Bureau of Economic Research, and a fellow of the American Academy of Arts and Sciences. He has published widely on...

"Optimal policy rules--including those regarding income taxation, commodity taxation, public goods, and externalities--are typically derived in models with homogeneous preferences. This article reconsiders many central results for the case in which preferences for commodities, public goods, and...