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Education Policy and Mobility: Some Basic Results

  • Ulrich Hange

This paper analyzes regional public education policy in the presence of mobile workers. Labor market integration leads to fiscal competition, shifting the whole burden of taxation to immobile workers. In the case of mobile skilled workers, this results in income inequalities and inefficient low investment in human capital. This is even more pronounced if politicians are partly self-interested. In contrast, if unskilled workers are mobile, all households receive the same net earnings. In this scenario, a benevolent government ensures an efficient level of human capital investment, while partly selfish politicians choose to invest too little in education.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-CESifo_Working_Papers/wp-cesifo-2003/wp-cesifo-2003-05/cesifo_wp937.pdf
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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 937.

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Date of creation: 2003
Date of revision:
Handle: RePEc:ces:ceswps:_937
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  1. Wellisch, Dietmar & Wildasin, David E., 1996. "Decentralized income redistribution and immigration," European Economic Review, Elsevier, vol. 40(1), pages 187-217, January.
  2. Fuest, Clemens & Huber, Bernd, 1999. "Tax Coordination and Unemployment," Munich Reprints in Economics 20298, University of Munich, Department of Economics.
  3. Wolfram F. Richter & Kerstin Schneider, 2001. "Taxing Mobile Capital with Labor Market Imperfections," CESifo Working Paper Series 477, CESifo Group Munich.
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