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How does Economic Integration Change Personal Income Taxation? Evidence from a new Index of Potential Labor Mobility

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  • Protte, Benjamin
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    Abstract

    In this paper, I estimate the effect of increasing labor mobility on personal income tax schedules. I combine rich data on effective personal income tax levels in a panel of OECD countries for the period 1986-2005 with a new Index of Potential Labor Mobility. This index allows to tackle issues of reverse causality and potentially confounding effects from strategic competition. Estimates show that increasing labor mobility accounts for a considerable part of lower tax burdens. Furthermore, the reduction is found to be constant across brackets of taxable income.

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    File URL: https://ub-madoc.bib.uni-mannheim.de/32590/1/Protte_12%2D20.pdf
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    Bibliographic Info

    Paper provided by University of Mannheim, Department of Economics in its series Working Papers with number 12-20.

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    Date of creation: 2012
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    Handle: RePEc:mnh:wpaper:32590

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    Keywords: Personal Income ; Taxation ; Economic Integration ; Labor Mobility;

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    18. Ran Abramitzky, 2008. "The Limits of Equality: Insights from the Israeli Kibbutz," The Quarterly Journal of Economics, MIT Press, vol. 123(3), pages 1111-1159, August.
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