In a model with ex-ante homogenous households, earnings risk and a general earnings function, we derive the optimal linear labor tax rate and optimal linear education subsidies. The optimal income tax trades off social insurance against incentives to work and to invest in human capital....

The literature suggests that public research and development (R&D) subsidies mayreduce market failures affecting private R&D investment caused by incompleteappropriability of knowledge and financial constraints due capital marketimperfections. Drawing on the theory of investment under...

The paper draws upon the work of T.W. Schultz to show that human capital theory andlabor market adjustments have important implications for investing in people for the 21st Century.[...]

This paper reviews the stylized facts regarding the distribution of human capital investments and the returns to those investments in developing countries. It then examines recent evidence regarding which policies can induce increased human capital investments in the most efficient manner, using...

This paper extends the standard human capital model with real options. Real options influenceinvestment behavior when risky investments in human capital are irreversible and individualscan affect the timing of the investment. Option values make individuals more reluctant toinvest in human...

Do the short and medium term adjustment costs associated with trade liberalization influenceschooling and child labor decisions? We examine this question in the context of India's 1991tariff reforms. Overall, in the 1990s, rural India experienced a dramatic increase in schoolingand decline in...

This paper studies the effects of patents and subsidies on R&D investment decisions. The theoretical framework is a two-stage game consisting of an investment and a market stage. In equilibrium, both patents and subsidies induce the same amount of R&D investment, which is higher than the...