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Tax Competition and Fiscal Sustainability

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  • Kazutoshi Miyazawa

    (Faculty of Economics, Doshisha University)

  • Hikaru Ogawa

    (Faculty of Economics, The University of Tokyo)

  • Toshiki Tamai

    (Department of Socio-Economic System)

Abstract

We develop a model in which ethnic minorities can either assimilate to the majority's norm or reject it by trading o higher productivity and wages with a greater social distance to their culture of origin. We show that "oppositional" minorities reside in more segregated areas, have worse outcomes (in terms of income) but are not necessary worse off in terms of welfare than assimilated minorities who live in less segregated areas. We nd that a policy that reduces transportation cost decreases rather than increases assimilation in cities. We also nd that when there are more productivity spillovers between the two groups, ethnic minorities are more likely not to assimilate and to reject the majority's norm. Finally, we show that ethnic minorities tend to assimilate more in bigger and more expensive cities.

Suggested Citation

  • Kazutoshi Miyazawa & Hikaru Ogawa & Toshiki Tamai, 2018. "Tax Competition and Fiscal Sustainability," CIRJE F-Series CIRJE-F-1104, CIRJE, Faculty of Economics, University of Tokyo.
  • Handle: RePEc:tky:fseres:2018cf1104
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