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Redistributive income taxation, outsourcing and foreign direct investment

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  • Aronsson, Thomas
  • Koskela, Erkki

Abstract

This paper deals with optimal income taxation under international outsourcing and FDI. We show how the joint effect of outsourcing and FDI on the optimal marginal income tax rates depends on whether FDI is horizontal or vertical.

Suggested Citation

  • Aronsson, Thomas & Koskela, Erkki, 2011. "Redistributive income taxation, outsourcing and foreign direct investment," Economics Letters, Elsevier, vol. 110(2), pages 86-89, February.
  • Handle: RePEc:eee:ecolet:v:110:y:2011:i:2:p:86-89
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    References listed on IDEAS

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    1. Martin S. Feldstein, 1995. "The Effects of Outbound Foreign Direct Investment on the Domestic Capital Stock," NBER Chapters,in: The Effects of Taxation on Multinational Corporations, pages 43-66 National Bureau of Economic Research, Inc.
    2. Chang-Tai Hsieh & Keong T. Woo, 2005. "The Impact of Outsourcing to China on Hong Kong's Labor Market," American Economic Review, American Economic Association, vol. 95(5), pages 1673-1687, December.
    3. Aronsson, Thomas & Koskela, Erkki, 2009. "Outsourcing and optimal nonlinear taxation: A note," Economics Letters, Elsevier, vol. 102(2), pages 135-137, February.
    4. Ingo Geishecker & Holger Görg, 2008. "Winners and losers: a micro-level analysis of international outsourcing and wages," Canadian Journal of Economics, Canadian Economics Association, vol. 41(1), pages 243-270, February.
    5. Stern, Nicholas, 1982. "Optimum taxation with errors in administration," Journal of Public Economics, Elsevier, vol. 17(2), pages 181-211, March.
    6. Mihir A. Desai & C. Fritz Foley & James R. Hines Jr., 2005. "Foreign Direct Investment and the Domestic Capital Stock," American Economic Review, American Economic Association, vol. 95(2), pages 33-38, May.
    7. Changkyu Choi, 2006. "Does foreign direct investment affect domestic income inequality?," Applied Economics Letters, Taylor & Francis Journals, vol. 13(12), pages 811-814.
    8. Alexander Hijzen, 2007. "International Outsourcing, Technological Change, and Wage Inequality," Review of International Economics, Wiley Blackwell, vol. 15(1), pages 188-205, February.
    9. Stiglitz, Joseph E., 1982. "Self-selection and Pareto efficient taxation," Journal of Public Economics, Elsevier, vol. 17(2), pages 213-240, March.
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