Endogenous Selection of Comparison Groups, Human Capital Formation, and Tax Policy

Oded Stark, Walter Hyll, Yong Wang

Research output: Contribution to journalArticlepeer-review

Abstract

We consider a setting in which the acquisition of human capital entails a change of location in social space that causes individuals to revise their comparison groups. Skill levels are viewed as occupational groups. Moving up the skill ladder by acquiring additional human capital, in itself rewarding, leads to a shift in the individual's inclination to compare himself with a different, and on average better-paid, comparison group, in itself penalizing. We shed new light on the dynamics of human capital formation, and suggest novel policy interventions to encourage human capital formation in the aggregate and reduce inter-group income inequality.

Original languageEnglish
Pages (from-to)62-75
Number of pages14
JournalEconomica
Volume79
Issue number313
DOIs
StatePublished - Jan 2012
Externally publishedYes

Fingerprint

Dive into the research topics of 'Endogenous Selection of Comparison Groups, Human Capital Formation, and Tax Policy'. Together they form a unique fingerprint.

Cite this