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Brain Drain and Fiscal Competition: a Theoretical Model for Europe

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  • Pierpaolo Giannoccolo

Abstract

In this paper we study Brain Drain (BD) and Fiscal Competition (FC) in a unified framework for the European Union (EU) specific context. Potential mobility of educated workers can increase the degree of FC through taxation or the provision of public education. An increase in FC can be caused by competition among different jurisdictions that aim to attract educated workers. When the importance of FC increases, then the European States may employ FC as a new policy tool. We propose a simple model in which is possible describe different scenarios: Brain Gain (when BD may increase average productivity in the source economy); Brain Drain (when there is unidirectional flow of highly skilled workers that is welfare-deteriorating in the source economy); Migration Competition (when the regions have not high differences in the productivity and they compete attracting educated workers); Fiscal Competition (when jurisdictions compete either to attract a mobile tax base), This simple model help us to explain several policies implemented by European regions.

Suggested Citation

  • Pierpaolo Giannoccolo, 2003. "Brain Drain and Fiscal Competition: a Theoretical Model for Europe," Working Papers 20060602, Università degli Studi di Milano-Bicocca, Dipartimento di Statistica, revised Jun 2006.
  • Handle: RePEc:mis:wpaper:20060602
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    File URL: http://www.statistica.unimib.it/utenti/WorkingPapers/WorkingPapers/20060602.pdf
    File Function: Revised version, June 2006
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    References listed on IDEAS

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    More about this item

    Keywords

    Brain Drain; Fiscal Competition; Migration Competition; Growth.;

    JEL classification:

    • F02 - International Economics - - General - - - International Economic Order and Integration
    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General
    • H52 - Public Economics - - National Government Expenditures and Related Policies - - - Government Expenditures and Education
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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