This paper studies optimal taxation of income and education when employers cannot observe workers' productivity and … workers signal their productivity to firms by choosing both quantity and quality of education. We characterize constrained …. Implementation through income and education dependent taxes is discussed, as well as education mandates. A key insight is that …

We analyze optimal redistribution in the presence of labor market signaling where innate productive ability is not only … unobserved by the government, but also by prospective employers. Our model features signaling in both one and two dimensions … of educational attainment, we analyze the dual role of income taxation in redistributing income and affecting signaling …

and 30% to education signaling workers' ability. …The social and the private returns to education differ when education can increase productivity, and also be used to … private returns to education within the employer learning framework of Farber and Gibbons [1996] and Altonji and Pierret [2001 …

and 30% to education signaling workers' ability. …The social and the private returns to education differ when education can increase productivity, and also be used to … private returns to education within the employer learning framework of Farber and Gibbons [1996] and Altonji and Pierret [2001 …