Dominik Sachs
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Prof. Dr.
Last Name
Sachs
First name
Dominik
Email
dominik.sachs@unisg.ch
Phone
+41 71 224 3513

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  • Publication
    Optimal Need-Based Financial Aid
    ( 2021)
    Colas, Mark
    ;
    Findeisen, Sebastian
    ;
    Sachs, Dominik
    We study the optimal design of student financial aid as a function of parental income. We derive optimal financial aid formulas in a general model. We estimate a model of selection into college for the United States that comprises multidimensional heterogeneity, endogenous parental transfers, dropout, labor supply in college, and uncertain returns. We quantify optimal financial aid in the estimated model and find it is strongly declining in parental income even without distributional concerns. Equity and efficiency go hand in hand.
    Type: journal article
    Journal: Journal of Political Economy
    Volume: 129
    Issue: 2
    DOI: 10.1086/711952
    URI: https://www.alexandria.unisg.ch/handle/20.500.14171/110896
    Scopus© Citations 6
  • Publication
    Education Policies and Taxation without Commitment
    ( 2018)
    Findeisen, Sebastian
    ;
    Sachs, Dominik
    We study the implications of limited commitment on education and tax policies chosen by benevolent governments. Individual wages are determined by both innate abilities and education levels. Consistent with real world practices, the government can decide to subsidize different levels of education at different rates. The lack of commitment influences the optimal structure of education subsidies. The direction of the effect depends on the design of labor taxes. With linear labor tax rates and a transfer for redistribution, subsidies become more progressive. By contrast, if the government is only constrained by informational asymmetries when designing taxes, subsidies become more regressive.
    Type: journal article
    Journal: The Scandinavian Journal of Economics
    Volume: 120
    Issue: 4
    URL: https://onlinelibrary.wiley.com/doi/abs/10.1111/sjoe.12246
    URI: https://www.alexandria.unisg.ch/handle/20.500.14171/101157
  • Publication
    Redistribution and insurance with simple tax instruments
    ( 2017)
    Findeisen, Sebastian
    ;
    Sachs, Dominik
    We analyze optimal taxation of labor and capital income in a life cycle framework with idiosyncratic income risk and ex-ante heterogeneity. Tax instruments are simple in that they can only condition on current income. We provide a decomposition of labor income tax formulas into a redistribution and an insurance component. The latter is independent of the social welfare function and determined by the degree of income risk and risk aversion. The optimal linear capital tax is non-zero and trades off redistribution and insurance against savings distortions. Our quantitative results reveal that the insurance component contributes significantly to optimal labor income tax rates and provides a lower bound on optimal taxes. Optimal capital taxes are significant.
    Type: journal article
    Journal: Journal of Public Economics
    Volume: 146
    URL: https://www.sciencedirect.com/science/article/pii/S0047272716302109
    URI: https://www.alexandria.unisg.ch/handle/20.500.14171/103017
  • Publication
    Education and optimal dynamic taxation: The role of income-contingent student loans
    ( 2016)
    Findeisen, Sebastian
    ;
    Sachs, Dominik
    We study the optimal design of integrated education finance and tax systems. The distribution of wages is endogenously determined by the costly education decisions of heterogeneous individuals before labor market entry. Consistent with empirical evidence, this human capital investment decision is risky. We find that an integrated education and tax system in which the government provides education loans to young individuals coupled with income-contingent repayment can always be designed in a Pareto optimal way. We present a simple empirically driven application of the framework to US data in which individuals make a college entry decision. We find the optimal repayment schemes for college loans can be well approximated by a schedule that is linearly increasing in income up to a threshold and constant afterwards. So although the full optimum could lead to complicated non-linear schedules in theory, very simple instruments can replicate it fairly well. The welfare gains from income-contingent repayment are significant.
    Type: journal article
    Journal: Journal of Public Economics
    Volume: 138
    URL: https://www.sciencedirect.com/science/article/pii/S0047272716300159
    URI: https://www.alexandria.unisg.ch/handle/20.500.14171/105076
  • Publication
    Type: conference poster
    URI: https://www.alexandria.unisg.ch/handle/20.500.14171/116949