The problem of economic development,' as Lucas (1988) states it, is the problem of accounting for the observed diversity in levels and rates of growth of per capita income across countries and across time. We study conditions under which capital mobility and labor mobility (two seemingly income-equalizing forces) may interact with cross-country differences in income tax rates and income tax principles (two seemingly income-diverging forces) to generate such diversity. As a corollary, we also examine when countries with different initial endowments may finally converge in their income levels.
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number
7115.
Length: Date of creation: May 1999 Date of revision: Handle: RePEc:nbr:nberwo:7115
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Find related papers by JEL classification: F2 - International Economics - - International Factor Movements and International Business H2 - Public Economics - - Taxation, Subsidies, and Revenue
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References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Barro, Robert J & Sala-i-Martin, Xavier, 1992.
"Convergence,"
Journal of Political Economy,
University of Chicago Press, vol. 100(2), pages 223-51, April.
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