TY  - JOUR
AU  - Heckman,James J.
AU  - Lochner,Lance
AU  - Taber,Christopher
TI  - Tax Policy and Human Capital Formation
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 6462
PY  - 1998
Y2  - March 1998
UR  - http://www.nber.org/papers/w6462
L1  - http://www.nber.org/papers/w6462.pdf
N1  - Author contact info:
James J. Heckman
Department of Economics
The University of Chicago
1126 E. 59th Street
Chicago, IL 60637
Tel: 773/702-0634
Fax: 773/702-8490
E-Mail: jjh@uchicago.edu

Lance Lochner
Department of Economics, Faculty of Social Science
University of Western Ontario
1151 Richmond Street, North
London, ON  N6A 5C2
CANADA
Tel: 519/661-2111 ext. 85281
Fax: 519/661-3666
E-Mail: llochner@uwo.ca

Christopher R. Taber
Department of Economics
University of Wisconsin -Madison
1180 Observatory Dr
Social Sciences Building #6448
Madison, WI 53706-1320
Tel: (608) 263-7791
Fax: (608) 262-2033
E-Mail: ctaber@ssc.wisc.edu
AB  - Missing from recent discussions of tax reform is any systematic analysis of the effects of various tax proposals on skill formation.  This gap in the literature in empirical public finance is due to the absence of any empirically based general equilibrium models with both human capital formation and physical capital formation that are consistent with observations on modern labor markets.  This paper is a progress report on our ongoing research on formulating and estimating dynamic general equilibrium models with endogenous heterogeneous human capital accumulation.  Our model explains many features of rising wage inequality in the U.S. economy (James Heckman, Lance Lochner and Christopher Taber, 1998).  In this paper, we use our model to study the impacts on skill formation of proposals to switch from progressive taxes to flat income and consumption taxes.  For the sake of brevity, we focus on steady states in this paper, although we study both transitions and steady states in our research.
ER  -