Optimal Educational Investment: Domestic Equity and International Competition

Table 1

Optimal rates of tax and education under various parameter assumptions in the model of income distribution.

	𝜎=0.5		𝜎=0.75		𝜎=0.9		𝜎=1
	𝜏^∗	𝜆^∗	𝜏^∗	𝜆^∗	𝜏^∗	𝜆^∗	𝜏^∗	𝜆^∗
𝑏=0.5; 𝛾=2	0.09	0.2237	0.14	0.2827	0.16	0.3035	0.17	0.3136
𝑏=0.2; 𝛾=3	0.03	0.1010	0.05	0.1308	0.07	0.1551	0.08	0.1660

Note. Throughout it is assumed that 𝑌₀=1.