Jacobs, Bas - In: International Tax and Public Finance 20 (2013) 2, pp. 312-337
elasticities, human capital investment should be efficient under optimal linear policies, whether general equilibrium effects are … present or not. Hence, education subsidies should not be used for distributional reasons. Due to general equilibrium effects …, optimal linear income taxes may even become negative. Optimal non-linear policies exploit general equilibrium effects for …