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Tax competition, trade liberalization, and imperfect labour markets

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  • Peter Egger
  • Tobias Seidel

Abstract

In this paper, we study the link between trade liberalization and imperfect labour markets for tax competition. We show that rigid labour markets increase the mobility of the tax base as compared to perfect labour markets translating into lower Nash tax rates. Lower trade barriers exhibit a similar effect. It turns out that the imperfect labour market and the trade liberalization channels are interdependent. Copyright 2011 Oxford University Press 2011 All rights reserved, Oxford University Press.

Suggested Citation

  • Peter Egger & Tobias Seidel, 2011. "Tax competition, trade liberalization, and imperfect labour markets," Oxford Economic Papers, Oxford University Press, vol. 63(4), pages 722-739, December.
    • Handle: RePEc:oup:oxecpp:v:63:y:2011:i:4:p:722-739
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    File URL: http://hdl.handle.net/10.1093/oep/gpq032
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    Cited by:

    1. Tadashi Morita & Yukiko Sawada & Kazuhiro Yamamoto, 2020. "Subsidy competition and imperfect labor markets," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(3), pages 698-728, June.
    2. Sebastian Krautheim & Tim Schmidt-Eisenlohr, 2016. "Wages and International Tax Competition," Review of International Economics, Wiley Blackwell, vol. 24(5), pages 893-923, November.
    3. Sangwha Shin & Sang-Hyun Kim, 2022. "Tax Competition under Imperfect Labor Market," Korean Economic Review, Korean Economic Association, vol. 38, pages 141-166.
    4. MORITA Tadashi & SAWADA Yukiko & YAMAMOTO Kazuhiro, 2016. "Subsidy Competition, Imperfect Labor Market, and Endogenous Entry of Firms," Discussion papers 16096, Research Institute of Economy, Trade and Industry (RIETI).
    5. Hikaru Ogawa & Yasuhiro Sato & Toshiki Tamai, 2016. "Who gains from capital market integration? Tax competition between unionized and non-unionized countries," Canadian Journal of Economics, Canadian Economics Association, vol. 49(1), pages 76-110, February.
    6. MORITA Tadashi & OGAWA Yoshitomo & ONO Yoshiyasu, 2017. "Corporate Tax Competition in the Presence of Unemployment," Discussion papers 17118, Research Institute of Economy, Trade and Industry (RIETI).
    7. Mittermaier, Ferdinand & Rincke, Johannes, 2013. "Do countries compensate firms for international wage differentials?," Journal of Public Economics, Elsevier, vol. 102(C), pages 23-36.
    8. Andrea Schneider, 2017. "Corporate Taxation of Heterogeneous Firms and the Welfare Effects of Labour Unions," The World Economy, Wiley Blackwell, vol. 40(4), pages 703-714, April.
    9. Keisuke Kawata, 2013. "Capital market integration and optimal employment protection policies," IDEC DP2 Series 3-9, Hiroshima University, Graduate School for International Development and Cooperation (IDEC).
    10. OGAWA Hikaru & OSHIRO Jun & SATO Yasuhiro, 2012. "Capital Mobility—a resource curse or blessing? How, when, and for whom?," Discussion papers 12063, Research Institute of Economy, Trade and Industry (RIETI).

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