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How does Economic Integration Change Personal Income Taxation? Evidence from a new Index of Potential Labor Mobility

  • Protte, Benjamin
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    In this paper, I estimate the effect of increasing labor mobility on personal income tax schedules. I combine rich data on effective personal income tax levels in a panel of OECD countries for the period 1986-2005 with a new Index of Potential Labor Mobility. This index allows to tackle issues of reverse causality and potentially confounding effects from strategic competition. Estimates show that increasing labor mobility accounts for a considerable part of lower tax burdens. Furthermore, the reduction is found to be constant across brackets of taxable income.

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    Paper provided by University of Mannheim, Department of Economics in its series Working Papers with number 12-20.

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    Date of creation: 2012
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    Handle: RePEc:mnh:wpaper:32590
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