Migration, wage differentials and fiscal competition
We analyze the effects, on nonredistributive taxation and on migrations, of wage differentials existing between two countries (regions) differing by the size of their population. Residents, otherwise identical, are heterogeneous because they incur different migration costs. Each resident compares the post-tax amount of money at home with the one obtained abroad, including the cost of migration. The government in each country maximizes the tax product in order to provide the largest possible amount of public good. We first assume that the income of citizens are identical across countries. Then, we assume that wages differ from one country to the other. We prove the existence of an equilibrium for any configuration of wage and any different relative size of the countries (regions). Then, we compute and characterize the equilibrium for any set of parameters, size and wage differential.
|Date of creation:||22 Dec 2011|
|Date of revision:|
|Contact details of provider:|| Postal: Voie du Roman Pays 34, 1348 Louvain-la-Neuve (Belgium)|
Fax: +32 10474304
Web page: http://www.uclouvain.be/core
More information through EDIRC
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.:
- Epple, Dennis & Romer, Thomas, 1991. "Mobility and Redistribution," Journal of Political Economy, University of Chicago Press, vol. 99(4), pages 828-58, August.
- David E. Wildasin, 2005. "Fiscal Competition," Working Papers 2005-05, University of Kentucky, Institute for Federalism and Intergovernmental Relations.
- Fleurbaey,Marc & Maniquet,François, 2011.
"A Theory of Fairness and Social Welfare,"
Cambridge University Press, number 9780521887427, November.
- Wellisch,Dietmar, 2000. "Theory of Public Finance in a Federal State," Cambridge Books, Cambridge University Press, number 9780521630351, November.
- Dimitris Korobilis, 2013.
"Var Forecasting Using Bayesian Variable Selection,"
Journal of Applied Econometrics,
John Wiley & Sons, Ltd., vol. 28(2), pages 204-230, 03.
- KOROBILIS, Dimitris, 2011. "VAR forecasting using Bayesian variable selection," CORE Discussion Papers 2011022, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Korobilis, Dimitris, 2009. "VAR forecasting using Bayesian variable selection," MPRA Paper 21124, University Library of Munich, Germany.
- Dimitris Korobilis, 2010. "VAR Forecasting Using Bayesian Variable Selection," Working Paper Series 51_10, The Rimini Centre for Economic Analysis, revised Apr 2011.
- Fuest, Clemens & Huber, Bernd & Mintz, Jack, 2005.
"Capital Mobility and Tax Competition,"
Foundations and Trends(R) in Microeconomics,
now publishers, vol. 1(1), pages 1-62, December.
- Gwenael Piaser, 2003.
"Labor Mobility and Income Tax Competition,"
- Myers, Gordon M., 1990.
"Optimality, free mobility, and the regional authority in a federation,"
Journal of Public Economics,
Elsevier, vol. 43(1), pages 107-121, October.
- Myers & G.M., 1989. "Optimality, Free Mobility And The Regional Authority In Federation," Working Papers 10, John Deutsch Institute for the Study of Economic Policy.
- Hansen, Nico A. & Kessler, Anke S., 2001. "(Non-)Existence of Equilibria in Multicommunity Models," Journal of Urban Economics, Elsevier, vol. 50(3), pages 418-435, November.
- Felix Bierbrauer & Craig Brett & John A. Weymark, 2011.
"Strategic Nonlinear Income Tax Competition with Perfect Labor Mobility,"
CESifo Working Paper Series
3329, CESifo Group Munich.
- Bierbrauer, Felix & Brett, Craig & Weymark, John A., 2013. "Strategic nonlinear income tax competition with perfect labor mobility," Games and Economic Behavior, Elsevier, vol. 82(C), pages 292-311.
- Craig Brett & John Weymark, 2008. "Strategic Nonlinear Income Tax Competition with Perfect Labor Mobility," Vanderbilt University Department of Economics Working Papers 0812, Vanderbilt University Department of Economics.
- Wildasin, David E., 1988.
"Nash equilibria in models of fiscal competition,"
Journal of Public Economics,
Elsevier, vol. 35(2), pages 229-240, March.
- Wildasin, D.E., 1987. "Nash equilibria in models of fiscal competition," CORE Discussion Papers 1987020, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- WILDASIN, David, . "Nash equilibria in models of fiscal competition," CORE Discussion Papers RP 804, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- 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, 04.
- Laussel, Didier & Le Breton, Michel, 1998. "Existence of Nash equilibria in fiscal competition models," Regional Science and Urban Economics, Elsevier, vol. 28(3), pages 283-296, May.
- Wallace E. Oates, 1968. "The Theory of Public Finance in a Federal System," Canadian Journal of Economics, Canadian Economics Association, vol. 1(1), pages 37-54, February.
- Wildasin, David E, 1991. "Income Redistribution in a Common Labor Market," American Economic Review, American Economic Association, vol. 81(4), pages 757-74, September.
- Duranton, Gilles & Martin, Philippe & Mayer, Thierry & Mayneris, Florian, 2010. "The Economics of Clusters: Lessons from the French Experience," OUP Catalogue, Oxford University Press, number 9780199592203, June.
- Weingast, Barry R. & Wittman, Donald, 2008. "The Oxford Handbook of Political Economy," OUP Catalogue, Oxford University Press, number 9780199548477, June.
When requesting a correction, please mention this item's handle: RePEc:cor:louvco:2011065. 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: (Alain GILLIS)
If references are entirely missing, you can add them using this form.