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Social Security and Taxation of Labour Subject to Subsidiarity and Freedom of Movement

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Author Info

  • Richter, Wolfram F.

    ()
    (TU Dortmund)

Abstract

In Europe, the competence for social security and the right to levy income tax lie with the country of employment in cross-border matters. This has two disadvantages. First, the Employment Principle distorts active persons' choice of place of work. Second, the employment-based regulation of state competencies cannot be applied to non-active persons. The Treaty of Maastricht, however, confers the right of free movement to all citizens of the Union. Against this background, this paper pleads for a reform in European policy coordination. The Employment Principle should be replaced with the Principle of Delayed Integration where cross-border matters are concerned.

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Bibliographic Info

Paper provided by Institute for the Study of Labor (IZA) in its series IZA Discussion Papers with number 490.

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Length: 27 pages
Date of creation: May 2002
Date of revision:
Publication status: published in: Swedish Economic Policy Review, 2002 (9), 47-74
Handle: RePEc:iza:izadps:dp490

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Related research

Keywords: free movement; Social security and taxation of mobile labour; Delayed Integration; Employment Principle; Origin Principle;

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References

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  1. Hansen, Jörgen & Löfström, Magnus, 2001. "The Dynamics of Immigrant Welfare and Labour Market Behaviour," CEPR Discussion Papers 3028, C.E.P.R. Discussion Papers.
  2. David Card, 1997. "Immigrant Inflows, Native Outflows, and the Local Labor Market Impacts of Higher Immigration," NBER Working Papers 5927, National Bureau of Economic Research, Inc.
  3. Torun Österberg & Björn Gustafsson, 2001. "Immigrants and the public sector budget - accounting exercises for Sweden," Journal of Population Economics, Springer, vol. 14(4), pages 689-708.
  4. Alan B. Krueger, 2000. "From Bismarck to Maastricht: The March to European Union and the Labor Compact," NBER Working Papers 7456, National Bureau of Economic Research, Inc.
  5. Lars P. Feld, 2000. "Fiskalischer Wettbewerb und Einkommensumverteilung," Perspektiven der Wirtschaftspolitik, Verein für Socialpolitik, vol. 1(2), pages 181-198, 05.
  6. Herbert Brücker & Parvati Trübswetter & Christian Weise, 2000. "EU-Osterweiterung: keine massive Zuwanderung zu erwarten," DIW Wochenbericht, DIW Berlin, German Institute for Economic Research, vol. 67(21), pages 315-326.
  7. Sinn, Hans-Werner, 1993. "How Much Europe? Subsidiarity, Centralization and Fiscal Competition," CEPR Discussion Papers 834, C.E.P.R. Discussion Papers.
  8. Feld, Lars P, 2000. " Tax Competition and Income Redistribution: An Empirical Analysis for Switzerland," Public Choice, Springer, vol. 105(1-2), pages 125-64, October.
  9. Fredriksson, P., 1995. "The Dynamics of Regional Labour Markets and Active Labour Market Policy: Swedish Evidence," Papers 1995-20, Uppsala - Working Paper Series.
  10. Feld, Lars P. & Kirchgassner, Gebhard, 2001. "Income tax competition at the State and Local Level in Switzerland," Regional Science and Urban Economics, Elsevier, vol. 31(2-3), pages 181-213, April.
  11. David E. Wildasin, 2000. "Factor Mobility and Fiscal Policy in the EU: Policy Issues and Analytical Approaches," CESifo Working Paper Series 344, CESifo Group Munich.
  12. George J. Borjas, 1998. "Immigration and Welfare Magnets," NBER Working Papers 6813, National Bureau of Economic Research, Inc.
  13. Bauer, Thomas K. & Zimmermann, Klaus F., 1999. "Report No. 3: Assessment of Possible Migration Pressure and its Labour Market Impact Following EU Enlargement to Central and Eastern Europe," IZA Research Reports 3, Institute for the Study of Labor (IZA).
  14. Bonin, Holger, 2001. "Fiskalische Effekte der Zuwanderung nach Deutschland - Eine Generationenbilanz," IZA Discussion Papers 305, Institute for the Study of Labor (IZA).
  15. Hans-Werner Sinn & Martin Werding, 2001. "Zuwanderung nach der EU-Osterweiterung: Wo liegen die Probleme?," Ifo Schnelldienst, Ifo Institute for Economic Research at the University of Munich, vol. 54(08), pages 18-27, 05.
  16. Pauly, Mark V., 1973. "Income redistribution as a local public good," Journal of Public Economics, Elsevier, vol. 2(1), pages 35-58, February.
  17. Wolfram F. Richter, 2001. "Delayed Integration of Mobile Labor: A Principle for Coordinating Taxation, Social Security, and Social Assistance," CESifo Working Paper Series 624, CESifo Group Munich.
  18. Hans-Werner Sinn & Gebhard Flaig & Martin Werding & Sonja Munz & Nicola Düll & Herbert Hofmann, 2001. "EU-Erweiterung und Arbeitskräftemigration : Wege zu einer schrittweisen Annäherung der Arbeitsmärkte," ifo Beiträge zur Wirtschaftsforschung, Ifo Institute for Economic Research at the University of Munich, number 2.
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Citations

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Cited by:
  1. Panu Poutvaara, 2003. "Educating Europe," Public Economics 0302008, EconWPA.
  2. Wolfram F. Richter, 2002. "Delaying Integration of Immigrant Labor for the Purpose of Taxation," CESifo Working Paper Series 802, CESifo Group Munich.
  3. Poutvaara, Panu, 2007. "Social security incentives, human capital investment and mobility of labor," Journal of Public Economics, Elsevier, vol. 91(7-8), pages 1299-1325, August.
  4. Poutvaara, Panu, 2006. "Public Education in an Integrated Europe: Studying to Migrate and Teaching to Stay?," IZA Discussion Papers 2478, Institute for the Study of Labor (IZA).
  5. Hans-Werner Sinn & Wolfgang Ochel, 2003. "Social Union, Convergence and Migration," Journal of Common Market Studies, Wiley Blackwell, vol. 41(5), pages 869-896, December.

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