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Migration and Tax Competition Within a Union


  • Razin, Assaf
  • Sadka, Efraim


We develop a stylized EU-type model of a union consisting of rich, capital-abundant and productive, countries, and poor,capital-scarce and low productivity, countries, in order to explain key features of tax policies and inter- and intra-migration flows. Our purpose is to explain the differences in the tax rates and the generosity of the welfare state, on the one hand, and migration flows, on the other hand, between rich and poor countries, within the union, and migration flows from the rest of the world. We identify a fiscal externality which makes the tax competition and the tax coordination regime to be different one from the other.

Suggested Citation

  • Razin, Assaf & Sadka, Efraim, 2013. "Migration and Tax Competition Within a Union," CEPR Discussion Papers 9600, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:9600

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    References listed on IDEAS

    1. Christian Dustmann & Tommaso Frattini & Caroline Halls, 2010. "Assessing the Fiscal Costs and Benefits of A8 Migration to the UK," Fiscal Studies, Institute for Fiscal Studies, vol. 31(1), pages 1-41, March.
    2. Ortega, Francesc, 2005. "Immigration quotas and skill upgrading," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1841-1863, September.
    3. Gordon H. Hanson & Kenneth Scheve & Matthew J. Slaughter, 2007. "Public Finance And Individual Preferences Over Globalization Strategies," Economics and Politics, Wiley Blackwell, vol. 19(1), pages 1-33, March.
    4. Alexander Kemnitz, 2002. "On the Political Economy of Low Skilled Immigration and the Welfare State," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 9(4), pages 423-434, August.
    5. Rosanne Altshuler & Timothy J. Goodspeed, 2015. "Follow the Leader? Evidence on European and US Tax Competition," Public Finance Review, , vol. 43(4), pages 485-504, July.
    6. repec:cup:apsrev:v:104:y:2010:i:01:p:61-84_99 is not listed on IDEAS
    7. Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416-416.
    8. Mendoza, Enrique G. & Tesar, Linda L., 2005. "Why hasn't tax competition triggered a race to the bottom? Some quantitative lessons from the EU," Journal of Monetary Economics, Elsevier, vol. 52(1), pages 163-204, January.
    9. Bhagwati, Jagdish & Hanson, Gordon H (ed.), 2009. "Skilled Immigration Today: Prospects, Problems, and Policies," OUP Catalogue, Oxford University Press, number 9780195382433.
    10. Case, Anne C. & Rosen, Harvey S. & Hines, James Jr., 1993. "Budget spillovers and fiscal policy interdependence : Evidence from the states," Journal of Public Economics, Elsevier, vol. 52(3), pages 285-307, October.
    11. Jan K. Brueckner, 2003. "Strategic Interaction Among Governments: An Overview of Empirical Studies," International Regional Science Review, , vol. 26(2), pages 175-188, April.
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    More about this item


    capital mobility; fiscal leakage; labor mobility;

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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