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External Equilibrium in Mobility and Redistribution Economies

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  • M. Socorro Puy

Abstract

We develop a simple model in which individuals, who are differentiated by skill levels, freely choose location among different regions. In each region there is a local labor market that determines the wage and a local redistributive taxation that is exogenously determined. Equilibrium requires that no agent wishes to migrate. We define some sufficient conditions for equilibrium, and we show that the greater the difference in mean skills across regions, the greater the difference in redistributive taxations across regions should be to avoid migration flows. A condition for uniqueness and stability of equilibrium is also provided.

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  • M. Socorro Puy, 2003. "External Equilibrium in Mobility and Redistribution Economies," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 5(2), pages 363-379, April.
  • Handle: RePEc:bla:jpbect:v:5:y:2003:i:2:p:363-379
    DOI: 10.1111/1467-9779.00137
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    References listed on IDEAS

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    Cited by:

    1. Jean Gabszewicz & Ornella Tarola & Skerdilajda Zanaj, 2016. "Migration, wages and income taxes," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 23(3), pages 434-453, June.
    2. Puy, M. Socorro, 2007. "Skill distributions and the compatibility between mobility and redistribution," Regional Science and Urban Economics, Elsevier, vol. 37(3), pages 345-362, May.
    3. Gomberg, Andrei, 2004. "Sorting equilibrium in a multi-jurisdiction model," Journal of Economic Theory, Elsevier, vol. 116(1), pages 138-154, May.
    4. GABSZEWICZ, Jean & TAROLA, Ornella, 2011. "Migration, wage differentials and fiscal competition," LIDAM Discussion Papers CORE 2011065, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).

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