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Geographic Mobility And Redistribution

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  • Daniele Coen‐Pirani

Abstract

I study the effect of progressive taxation on internal migration and welfare using a quantitative dynamic model of geographic mobility. The model, which is analytically tractable, predicts that a more progressive tax‐transfer scheme reduces internal migration rates. The magnitude of this relationship is consistent with reduced‐form evidence for OECD countries. The internal migration channel contributes to significantly lower optimal tax progressivity relative to the one‐location version of the economy. The optimal sequence of tax progressivity along the transition features a relatively high degree of tax progressivity early on, followed by a declining path of tax progressivity over time.

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  • Daniele Coen‐Pirani, 2021. "Geographic Mobility And Redistribution," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 62(3), pages 921-952, August.
    • Handle: RePEc:wly:iecrev:v:62:y:2021:i:3:p:921-952
    DOI: 10.1111/iere.12508
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    1. Colas, Mark & Saulnier, Emmett, 2023. "Vertical migration externalities," Regional Science and Urban Economics, Elsevier, vol. 101(C).
    2. Mark Huggett & Wenlan Luo, 2023. "Optimal Income Taxation: An Urban Economics Perspective," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 51, pages 847-866, December.
    3. Mark Huggett & Wenlan Luo, 2023. "Optimal Income Taxation: An Urban Economics Perspective," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 51, pages 847-866, December.
    4. Maximiliano Dvorkin, 2023. "Heterogeneous Agents Dynamic Spatial General Equilibrium," Working Papers 2023-005, Federal Reserve Bank of St. Louis.

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