This paper studies how linear tax and education policy should optimally respond to skill-biased technical change (SBTC). SBTC affects optimal taxes and subsidies by changing i) direct distributional benefits, ii) indirect redistributional effects due to wage-(de)compression, and iii) education...

We study optimal linear income taxation in a model with heterogeneous agents where earnings potentials are endogenously determined through human capital accumulation. Agents differ in initial conditions and ability to learn. Capital market imperfections prevent poor agents to invest optimally in...

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 efficient allocations and derive conditions under which...

In an interesting and influential paper Robert Lucas (1993) considering the experience of East Asian small economies, suggests that on the job" learning could be the principal engine of their miraculous growth in the last 20 years. In this paper I develop an overlapping generation model where on...

The paper presents a dynamic general-equilibrium model of education, quality and variety innovation, and scale-invariant growth. We consider endogenous humancapital accumulation in an educational sector and quality and variety innovation in two separate R&D sectors. In the balanced growth...