Heterogeneous Discount Factor, Education Subsidy, and Inequality

08/11/2012 |  Naor Ziv
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Welfare Policy and Labor Market

Abstract

 

A human capital accumulation process in a heterogeneous discount factor framework shows that higher subsidy to human capital accumulation leads to more income inequality. Financing the subsidy via taxes, and the division of taxes between the types of agents play an important role in income inequality.