TY  - JOUR
AU  - Philippon,Thomas
TI  - Financiers vs. Engineers: Should the Financial Sector be Taxed or Subsidized?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 13560
PY  - 2007
Y2  - October 2007
UR  - http://www.nber.org/papers/w13560
L1  - http://www.nber.org/papers/w13560.pdf
N1  - Author contact info:
Thomas Philippon
New York University
Stern School of Business
44 West 4th Street, Suite 9-190
New York, NY  10012-1126
Tel: 212/998-0490
Fax: 212/995-4233
E-Mail: tphilipp@stern.nyu.edu
AB  - I study the allocation of human capital in an economy with production externalities, financial constraints and career choices. Agents choose to become entrepreneurs, workers or financiers. Entrepreneurship has positive externalities, but innovators face borrowing constraints and require the services of financiers in order to invest efficiently. When investment and education subsidies are chosen optimally, I find that the financial sector should be taxed in exactly the same way as the non-financial sector. When direct subsidies to investment and scientific education are not feasible, giving a preferred tax treatment to the financial sector can improve welfare by increasing aggregate investment in research and development.
ER  -