IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this paper or follow this series

Fiscal and Migration Competition

  • Assaf Razin
  • Efraim Sadka

It is often argued that tax competition may lead to a "race to the bottom". Such a race may hold indeed in the case of the pure case of factor mobility (such as capital mobility). However, in this paper we emphasize the unique feature of labor migration, that may nullify the "race to the bottom" hypothesis. Labor migration is governed by net-of-tax factor rewards and the benefits that the welfare state provides. Tax rates are determined in a political economy set up which takes into account the effect of taxes and migration on factor rewards and the fiscal burden imposed by migration on the decisive voter. The paper models the host country stylistically as a member of the core of an economic union (i.e., a core EU welfare state member state), with tax financed benefits which is able to control the volume and the skill-composition of migration. The source country is modeled as an accession country to an economic union (i.e., through the EU enlargement treaty), with its own welfare (tax-benefit) policy. We let these two countries engage in fiscal competition. Using numerical simulations we examine how the migration policies are affected by whether the skilled or the unskilled are in power. We also analyze differences for tax policies between free and controlled migration, and the role of productivity gap.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.nber.org/papers/w16224.pdf
Download Restriction: no

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 16224.

as
in new window

Length:
Date of creation: Jul 2010
Date of revision:
Publication status: published as Assaf Razin and Efraim Sadka "Tax Competition and Migration: The Race ‐ to ‐ the ‐ Bottom Hypothesis Revisited" forthcoming in CESifo Economic Studies , Volume 58, Number 1, March 2012, Oxford University Press.
Handle: RePEc:nbr:nberwo:16224
Note: IFM POL
Contact details of provider: Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Phone: 617-868-3900
Web page: http://www.nber.org
Email:


More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Gordon H. Hanson & Kenneth F. Scheve & Matthew Slaughter, 2005. "Public Finance and Individual Preferences over Globalization Strategies," NBER Working Papers 11028, National Bureau of Economic Research, Inc.
  2. Gordon H. Hanson, 2009. "The Economic Consequences of the International Migration of Labor," Annual Review of Economics, Annual Reviews, vol. 1(1), pages 179-208, 05.
  3. Razin, A. & Sadka, E. & Swagel, P., 1998. "Tax Burden and Migration: a Political Economy Theory and Evidence," Papers 15-98, Tel Aviv.
  4. Anna Maria Mayda, 2006. "Who Is Against Immigration? A Cross-Country Investigation of Individual Attitudes toward Immigrants," The Review of Economics and Statistics, MIT Press, vol. 88(3), pages 510-530, August.
  5. Christian Dustmann & Tommaso Frattini & Caroline Halls, 2009. "Assessing the Fiscal Costs and Benefits of A8 Migration to the UK," CReAM Discussion Paper Series 0918, Centre for Research and Analysis of Migration (CReAM), Department of Economics, University College London.
  6. Barbone, Luca & Bontch-Osmolovsky, Misha & Zaidi, Salman, 2009. "The foreign-born population in the European Union and its contribution to national tax and benefit systems : some insights from recent household survey data," Policy Research Working Paper Series 4899, The World Bank.
  7. Razin, Assaf & Sadka, Efraim & Swagel, Phill, 2001. "The Aging Population and the Size of the Welfare State," CEPR Discussion Papers 2930, C.E.P.R. Discussion Papers.
  8. V.V. Chari & Patrick J. Kehoe, 1989. "International coordination of fiscal policy in limiting economies," Staff Report 121, Federal Reserve Bank of Minneapolis.
  9. Cohen, Alon & Razin, Assaf & Sadka, Efraim, 2009. "The Skill Composition of Migration and the Generosity of the Welfare State," CEPR Discussion Papers 7185, C.E.P.R. Discussion Papers.
  10. Jasso, Guillermina & Rosenzweig, Mark R., 2008. "Selection Criteria and the Skill Composition of Immigrants: A Comparative Analysis of Australian and U.S. Employment Immigration," IZA Discussion Papers 3564, Institute for the Study of Labor (IZA).
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:16224. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ()

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.