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Agglomeration, Migration and Tax Competition

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  • Kurt A. Hafner
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    Abstract

    The paper focuses on tax competition and international migration in R&D sectors as agglomeration forces and trade restrictions are present. Core countries in economically integrating regions adapt tax rates to keep their industrial status quo. Unlike the often discussed “race to the bottom” result, tax rates are increased and the provision of public goods is maintained. Additionally, tax rates that redistribute between mobile and immobile labor lead to a tax burden that favors mobile labor. As economic integration continues, the cutback of factor mobility restrictions for skilled labor supports economic development in core countries at the expense of periphery countries.

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    File URL: http://www.degit.ifw-kiel.de/papers/degit_11/C011_027.pdf
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    Bibliographic Info

    Paper provided by DEGIT, Dynamics, Economic Growth, and International Trade in its series DEGIT Conference Papers with number c011_027.

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    Length: 28 pages JEL Classification: F12, F22, H73, R12
    Date of creation: Jun 2006
    Date of revision:
    Handle: RePEc:deg:conpap:c011_027

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    Related research

    Keywords: Economic Geography; Agglomeration; Migration; Tax Competition;

    This paper has been announced in the following NEP Reports:

    References

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    1. Borck, Rainald & Pfluger, Michael, 2006. "Agglomeration and tax competition," European Economic Review, Elsevier, vol. 50(3), pages 647-668, April.
    2. Ottaviano, Gianmarco Ireo Paolo, 1996. "Monopolistic Competition, Trade, and Endogenous Spatial Fluctuations," CEPR Discussion Papers 1327, C.E.P.R. Discussion Papers.
    3. Fredrik Andersson & Rikard Forslid, 2000. "Tax Competition and Economic Geography," Econometric Society World Congress 2000 Contributed Papers 1356, Econometric Society.
    4. Ottaviano, G.I.P. & Thisse, J.-F., 1999. "Integration, Agglomeration and the Political Economics of Factor Mobility," Economics Working Papers eco99/27, European University Institute.
    5. Paul Krugman, 1990. "Increasing Returns and Economic Geography," NBER Working Papers 3275, National Bureau of Economic Research, Inc.
    6. Spence, Michael, 1976. "Product Selection, Fixed Costs, and Monopolistic Competition," Review of Economic Studies, Wiley Blackwell, vol. 43(2), pages 217-35, June.
    7. Baldwin, Richard E. & Krugman, Paul, 2004. "Agglomeration, integration and tax harmonisation," European Economic Review, Elsevier, vol. 48(1), pages 1-23, February.
    8. Lundborg, Per & Segerstrom, Paul S., 1998. "The Growth and Welfare Effects of International Mass Migration," Working Paper Series 146, Trade Union Institute for Economic Research.
    9. Venables, Anthony J., 1993. "Equilibrium Locations of Vertically Linked Industries," CEPR Discussion Papers 802, C.E.P.R. Discussion Papers.
    10. Hafner, Kurt A., 2004. "Industrial Agglomeration and Economic Development," Center for European, Governance and Economic Development Research Discussion Papers 31, University of Goettingen, Department of Economics.
    11. Krugman, Paul & Venables, Anthony J., 1995. "Globalization and the Inequality of Nations," Working Paper Series 430, Research Institute of Industrial Economics.
    12. Masahisa Fujita & Paul Krugman & Anthony J. Venables, 2001. "The Spatial Economy: Cities, Regions, and International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262561476.
    13. Fujita,Masahisa & Thisse,Jacques-Francois, 2002. "Economics of Agglomeration," Cambridge Books, Cambridge University Press, number 9780521801386.
    14. Shields, Gail M & Shields, Michael P, 1989. " The Emergence of Migration Theory and a Suggested New Direction," Journal of Economic Surveys, Wiley Blackwell, vol. 3(4), pages 277-304.
    15. Martin, Philippe & Ottaviano, Gianmarco Ireo Paolo, 1996. "Growing Locations: Industry Location in a Model of Endogenous Growth," CEPR Discussion Papers 1523, C.E.P.R. Discussion Papers.
    16. Puga, Diego, 1999. "The rise and fall of regional inequalities," European Economic Review, Elsevier, vol. 43(2), pages 303-334, February.
    17. Forslid, Rikard, 1999. "Agglomeration with Human and Physical Capital: an Analytically Solvable Case," CEPR Discussion Papers 2102, C.E.P.R. Discussion Papers.
    18. Dixit, Avinash K & Stiglitz, Joseph E, 1975. "Monopolistic Competition and Optimum Product Diversity," The Warwick Economics Research Paper Series (TWERPS) 64, University of Warwick, Department of Economics.
    19. Hafner, Kurt A., 2004. "Industrial Agglomeration and Economic Development," Center for European, Governance and Economic Development Research Discussion Papers 31, University of Goettingen, Department of Economics.
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