Faculty of Business Seminar Series / Musab Kurnaz

Title: Optimal Taxation and Intergenerational Human Capital Transformation.

Abstract: In this paper, we examine the optimal tax policies on intergenerational human capital transfers. We study a dynastic model of household behavior to estimate and decompose the correlations in earnings across generations. In an environment where parents make both monetary and time investment on children’s human capital, the estimated model can explain 75% to 80% of the observed correlation in lifetime earnings across generations. We find that human capital accumulation in the labor market, the nonlinear return to part- versus full-time work, and the return to parental time investment in children are the main forces driving the intergenerational correlation in earnings through their effects on fertility and the division of labor within the household. The optimal policy is shaped by these forces.

Place: Meeting Room AB2-345