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The Influence of globalization on taxes and social policy - an empirical enalysis for OECD countries

  • Axel Dreher

    (Department of Economics, University of Exeter)

Using panel regression for the period 1970-2000 the paper analyzes whether globalization has influenced the OECD countries' social and overall spending as well as their implicit tax rates on labor, consumption and capital. Accounting for potential endogeneity of the regressors, the results show that globalization (measured by an index covering 23 variables) did not decrease the leeway for independent economic policy. Globalization even increased implicit tax rates on capital – a result that is mainly driven by economic integration. Depending on the method of estimation, increasing social integration also plays a role, while political integration does not matter for economic policy.

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Paper provided by Exeter University, Department of Economics in its series Discussion Papers with number 0301.

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Date of creation: Sep 2003
Date of revision:
Handle: RePEc:exe:wpaper:0301
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  1. Bretschger, Lucas & Hettich, Frank, 2000. "Globalisation, capital mobility and tax competition: Theory and evidence for OECD countries," Wirtschaftswissenschaftliche Diskussionspapiere 07/2000, Ernst Moritz Arndt University of Greifswald, Faculty of Law and Economics.
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  3. Ludema, Rodney D & Wooton, Ian, 1998. "Economic Geography and the Fiscal Effects of Regional Integration," CEPR Discussion Papers 1822, C.E.P.R. Discussion Papers.
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  8. David Carey & Josette Rabesona, 2002. "Tax Ratios on Labour and Capital Income and on Consumption," OECD Economic Studies, OECD Publishing, vol. 2002(2), pages 129-174.
  9. Heinemann, Friedrich, 1999. "Does globalization restrict budgetary autonomy? A multidimensional approach," ZEW Discussion Papers 99-29, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
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  12. Friedrich Heinemann, 2000. "Does globalization restrict budgetary autonomy?," Intereconomics: Review of European Economic Policy, Springer, vol. 35(6), pages 288-298, November.
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  16. Devereux, Michael P & Griffith, Rachel, 2003. "Evaluating Tax Policy for Location Decisions," International Tax and Public Finance, Springer, vol. 10(2), pages 107-26, March.
  17. Razin, Assaf & Sadka, Efraim & Swagel, Phillip, 2002. "Tax burden and migration: a political economy theory and evidence," Journal of Public Economics, Elsevier, vol. 85(2), pages 167-190, August.
  18. Garrett, Geoffrey, 1995. "Capital mobility, trade, and the domestic politics of economic policy," International Organization, Cambridge University Press, vol. 49(04), pages 657-687, September.
  19. Beck, Thorsten & Demirguc-Kunt, Asli & Levine, Ross, 1999. "A new database on financial development and structure," Policy Research Working Paper Series 2146, The World Bank.
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  21. Wilson, John Douglas & Wildasin, David E., 2004. "Capital tax competition: bane or boon," Journal of Public Economics, Elsevier, vol. 88(6), pages 1065-1091, June.
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  23. Jan-Egbert Sturm & Bjørn Volkerink, 2003. "How to Measure the Tax Burden on Labour at the Macro-Level?," CESifo Working Paper Series 963, CESifo Group Munich.
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