External Equilibrium in Mobility and Redistribution Economies
AbstractWe develop a simple model in which individuals, who are differentiated by skill levels, freely choose location among different regions. In each region there is a local labor market that determines the wage and a local redistributive taxation that is exogenously determined. Equilibrium requires that no agent wishes to migrate. We define some sufficient conditions for equilibrium, and we show that the greater the difference in mean skills across regions, the greater the difference in redistributive taxations across regions should be to avoid migration flows. A condition for uniqueness and stability of equilibrium is also provided. Copyright 2003 Blackwell Publishing Inc..
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Bibliographic InfoArticle provided by Association for Public Economic Theory in its journal Journal of Public Economic Theory.
Volume (Year): 5 (2003)
Issue (Month): 2 (04)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=1097-3923
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- GABSZEWICZ, Jean & TAROLA, Ornella, 2011. "Migration, wage differentials and fiscal competition," CORE Discussion Papers 2011065, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
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Economic Working Papers at Centro de Estudios Andaluces
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- Puy, M. Socorro, 2007. "Skill distributions and the compatibility between mobility and redistribution," Regional Science and Urban Economics, Elsevier, vol. 37(3), pages 345-362, May.
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