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Agglomeration, Migration and Tax Competition

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  • Kurt A. Hafner

Abstract

The paper focuses on tax competition and international migration in R&D sectors as agglomeration forces and trade restrictions are present. Core countries in economically integrating regions adapt tax rates to keep their industrial status quo. Unlike the often discussed “race to the bottom” result, tax rates are increased and the provision of public goods is maintained. Additionally, tax rates that redistribute between mobile and immobile labor lead to a tax burden that favors mobile labor. As economic integration continues, the cutback of factor mobility restrictions for skilled labor supports economic development in core countries at the expense of periphery countries.

Suggested Citation

  • Kurt A. Hafner, 2006. "Agglomeration, Migration and Tax Competition," DEGIT Conference Papers c011_027, DEGIT, Dynamics, Economic Growth, and International Trade.
    • Handle: RePEc:deg:conpap:c011_027
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    References listed on IDEAS

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    9. Alfarano Simone & Milakovic Mishael, 2012. "Identification of Interaction Effects in Survey Expectations: A Cautionary Note," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 16(4), pages 1-23, October.
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    More about this item

    Keywords

    Economic Geography; Agglomeration; Migration; Tax Competition;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects

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