IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

Factor mobility and fiscal policy in the EU: policy issues and analytical approaches

  • David E. Wildasin

This paper outlines some of the implications of factor market integration for fiscal policy in the countries of the EU and for the EU itself. It draws particular attention to the dynamic dimensions of factor market integration, and identifies some of the many issues for further research on these topics. The past century has seen dramatic growth in the role of the public sector in the countries of Western Europe, both by extensive regulatory as well as fiscal interventions. By far the most important reason for the growth of public spending has been the increase in the level of redistributive (or social insurance) activities of governments. These include public pension systems and health care programs as well as a host of other policies. Tax policies also have the e ect of redistributing income among different groups. European economic integration, including prospective enlargement of the EU, contributes to the freer movement of factors of production, such as labor and capital, both within the EU and between the EU and neighboring regions. Integration of factor markets affects the distribution of income and factor movements depend on fiscal incentives, affecting the benefits and costs of redistributive policies. The paper begins by recapitulating some of the basic principles that have emerged from the existing literature on fiscal competition. It then describes recent trends in international migration and capital movements. The evidence suggests that the countries of Europe are experiencing inter-regional movements of labor and capital of significant magnitude, but that these movements are far from instantaneous. Labor and capital markets are clearly linked across regions, but there appear to be obstacles to very rapid adjustments of labor and capital stocks, suggesting that labor and capital are mobile but imperfectly so. The analysis of factor mobility with explicit dynamics thus offers promise. Different types of "stock adjustment" models of labor and cap

(This abstract was borrowed from another version of this item.)

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/1468-0327.00064
File Function: link to full text
Download Restriction: Access to full text is restricted to subscribers.

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Article provided by CEPR & CES & MSH in its journal Economic Policy.

Volume (Year): 15 (2000)
Issue (Month): 31 (October)
Pages: 337-378

as
in new window

Handle: RePEc:bla:ecpoli:v:15:y:2000:i:31:p:337-378
Contact details of provider: Postal: 3rd Floor, 77 Bastwick Street, London EC1V 3PZ
Phone: +44 (0)20 7183 8801
Fax: +44 (0)20 7183 8820
Web page: http://www.blackwellpublishing.com/journal.asp?ref=0266-4658
Email:


More information through EDIRC

Postal: Schackstr. 4, 80539 Munich
Phone: +49 (89) 2180-2748
Fax: +49 (89) 39 73 03
Web page: http://www.cesifo-group.de/portal/page/portal/ifoHome/f-about/f2aboutces
Email:


More information through EDIRC

Postal: 48 boulevard Jourdan - 75014 Paris
Phone: 01 43 13 63 00
Fax: 01 43 13 63 10
Web page: http://www.pse.ens.fr/
Email:


More information through EDIRC

Order Information: Web: http://www.blackwellpublishing.com/subs.asp?ref=0266-4658

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.:

as in new window
  1. Marianne Baxter & Urban J. Jermann, 1995. "The International Diversification Puzzle is Worse Than You Think," NBER Working Papers 5019, National Bureau of Economic Research, Inc.
  2. CREMER, Helmuth & FOURGEAUD, Virginie & LEITE-MONTEIRO, Manuel & MARCHAND, Maurice, . "Mobility and redistribution: A survey," CORE Discussion Papers RP 1371, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  3. Boadway, Robin, 1979. "Long-run Tax Incidence: A Comparative Dynamic Approach," Review of Economic Studies, Wiley Blackwell, vol. 46(3), pages 505-11, July.
  4. Jan K. Brueckner, 1999. "Welfare Reform and the Race to the Bottom: Theory and Evidence," Southern Economic Journal, Southern Economic Association, vol. 66(2), pages 505-525, January.
  5. Topel, Robert H, 1986. "Local Labor Markets," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages S111-43, June.
  6. Daniele Franco & Jagadeesh Gokhale & Luigi Guiso & Laurence J. Kotlikoff & Nicola Sartor, 1992. "Generational accounting: the case of Italy," Working Paper 9208, Federal Reserve Bank of Cleveland.
  7. Robert H. Topel & Michael P. Ward, 1988. "Job Mobility and the Careers of Young Men," NBER Working Papers 2649, National Bureau of Economic Research, Inc.
  8. Ronnie Schoeb & David E. Wildasin, 2001. "Economic Integration and Labor Market Institutions: Worker Mobility, Earnings Risk, and Contract Structure," Labor and Demography 0112002, EconWPA.
  9. Richard E. Baldwin & Joseph F. Francois & Richard Portes, 1997. "The costs and benefits of eastern enlargement: the impact on the EU and central Europe," Economic Policy, CEPR;CES;MSH, vol. 12(24), pages 125-176, 04.
  10. Wallace E. Oates, 1999. "An Essay on Fiscal Federalism," Journal of Economic Literature, American Economic Association, vol. 37(3), pages 1120-1149, September.
  11. Wildasin, David E. & Wilson, John Douglas, 1998. "Risky local tax bases: risk-pooling vs. rent-capture," Journal of Public Economics, Elsevier, vol. 69(2), pages 229-247, June.
  12. Hans-Werner Sinn, 1995. "Staggering along: wages policy and investment support in East Germany," The Economics of Transition, The European Bank for Reconstruction and Development, vol. 3(4), pages 403-426, December.
  13. Hercowitz, Z. & Pines, D., 1991. "Migration with Fiscal Externalities," Papers 9-91, Tel Aviv.
  14. Enrique G. Mendoza & Linda L. Tesar, 1995. "Supply-Side Economics in a Global Economy," NBER Working Papers 5086, National Bureau of Economic Research, Inc.
  15. Robert H. Topel, 1990. "Specific Capital, Mobility, and Wages: Wages Rise with Job Seniority," NBER Working Papers 3294, National Bureau of Economic Research, Inc.
  16. Hamermesh, Daniel S. & Pfann, Gerard Antonie, 1996. "Adjustment Costs in Factor Demand," CEPR Discussion Papers 1371, C.E.P.R. Discussion Papers.
  17. Wildasin, D.E., 1992. "State Income Taxation with Mobile Labor," Papers 92-010, Indiana - Center for Econometric Model Research.
  18. David E. Wildasin, 1994. "Income Redistribution and Migration," Canadian Journal of Economics, Canadian Economics Association, vol. 27(3), pages 637-56, August.
  19. Persson, Mats, 1995. " Why Are Taxes So High in Egalitarian Societies?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 97(4), pages 569-80, December.
  20. Decressin, Jorg & Fatas, Antonio, 1995. "Regional labor market dynamics in Europe," European Economic Review, Elsevier, vol. 39(9), pages 1627-1655, December.
  21. Wildasin, David E., 1989. "Interjurisdictional capital mobility: Fiscal externality and a corrective subsidy," Journal of Urban Economics, Elsevier, vol. 25(2), pages 193-212, March.
  22. Wilson, John D., 1986. "A theory of interregional tax competition," Journal of Urban Economics, Elsevier, vol. 19(3), pages 296-315, May.
  23. Horst Siebert, 1997. "Labor Market Rigidities: At the Root of Unemployment in Europe," Journal of Economic Perspectives, American Economic Association, vol. 11(3), pages 37-54, Summer.
  24. Wildasin, David E. & Wilson, John Douglas, 1996. "Imperfect mobility and local government behaviour in an overlapping-generations model," Journal of Public Economics, Elsevier, vol. 60(2), pages 177-198, May.
  25. Gerlinde Sinn & Hans-Werner Sinn, 1994. "Jumpstart: The Economic Unification of Germany," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262691728, June.
  26. Wilson, John Douglas, 1999. "Theories of Tax Competition," National Tax Journal, National Tax Association, vol. 52(n. 2), pages 269-304, June.
  27. Straubhaar, Thomas & Zimmermann, Klaus F, 1992. "Towards a European Migration Policy," CEPR Discussion Papers 641, C.E.P.R. Discussion Papers.
  28. Mieszkowski, Peter, 1972. "The property tax: An excise tax or a profits tax?," Journal of Public Economics, Elsevier, vol. 1(1), pages 73-96, April.
  29. Chiswick, Barry R, 1988. "Illegal Immigration and Immigration Control," Journal of Economic Perspectives, American Economic Association, vol. 2(3), pages 101-15, Summer.
  30. Wildasin, David E, 1992. "Relaxation of Barriers to Factor Mobility and Income Redistribution," Public Finance = Finances publiques, , vol. 47(Supplemen), pages 216-30.
  31. Bradford, David F., 1978. "Factor prices may be constant but factor returns are not," Economics Letters, Elsevier, vol. 1(3), pages 199-203.
  32. Goodspeed, Timothy J., 2000. "Tax structure in a federation," Journal of Public Economics, Elsevier, vol. 75(3), pages 493-506, March.
  33. Keen, Michael & Marchand, Maurice, 1997. "Fiscal competition and the pattern of public spending," Journal of Public Economics, Elsevier, vol. 66(1), pages 33-53, October.
  34. repec:cup:cbooks:9780521630351 is not listed on IDEAS
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:bla:ecpoli:v:15:y:2000:i:31:p:337-378. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing)

or (Christopher F. Baum)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.