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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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    Postal: 68131 Mannheim
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    Web page: http://www2.vwl.uni-mannheim.de/10.1.html
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    Keywords: Personal Income ; Taxation ; Economic Integration ; Labor Mobility;

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    1. Emmanuel Saez & Joel Slemrod & Seth H. Giertz, 2012. "The Elasticity of Taxable Income with Respect to Marginal Tax Rates: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 50(1), pages 3-50, March.
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    15. Jeffrey Grogger & Gordon H. Hanson, 2008. "Income Maximization and the Selection and Sorting of International Migrants," NBER Working Papers 13821, National Bureau of Economic Research, Inc.
    16. Goldmann, Gustave & Sweetman, Arthur & Warman, Casey, 2011. "The Portability of New Immigrants' Human Capital: Language, Education and Occupational Matching," IZA Discussion Papers 5851, Institute for the Study of Labor (IZA).
    17. Francesc Ortega & Giovanni Peri, 2012. "The Effect of Income and Immigration Policies on International Migration," NBER Working Papers 18322, National Bureau of Economic Research, Inc.
    18. Wilson, John Douglas, 1999. "Theories of Tax Competition," National Tax Journal, National Tax Association, vol. 52(n. 2), pages 269-304, June.
    19. 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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