In this paper we analyze the effect of increasing labor (i.e. graduates’/ academics’) and student mobility on net tax revenues when revenuemaximizing governments compete for human capital by means of income tax rates and amenities offered to students (positive expenditure) or rather tuition fees (negative expenditure). We demonstrate that these instruments are strategic complements and that increasing labor mobility due to ongoing globalization not necessarily implies intensified tax competition and an erosion of revenues. On the contrary, the equilibrium tax rate even increases in mobility. Amenities offered to students (or rather tuition fees) may either increase or decrease, and, overall, net revenues increase. An increase in student mobility, however, erodes revenues due to intensified tax and amenity competition.
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Paper provided by University of Paderborn, CIE Center for International Economics in its series Working Papers with number
8.
Find related papers by JEL classification: I22 - Health, Education, and Welfare - - Education - - - Educational Finance J61 - Labor and Demographic Economics - - Mobility, Unemployment, and Vacancies - - - Geographic Labor Mobility; Immigrant Workers F22 - International Economics - - International Factor Movements and International Business - - - International Migration H2 - Public Economics - - Taxation, Subsidies, and Revenue H87 - Public Economics - - Miscellaneous Issues - - - International Fiscal Issues; International Public Goods
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