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Let's stay in touch - Evidence on the role of social learning in local tax interactions

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  • Blesse, Sebastian
  • Martin, Thorsten

Abstract

This paper exploits detailed information on local political and socioeconomic networks and a reform of local fiscal equalization in North Rhine-Westphalia (NRW) to identify the role of learning in local tax rate interactions. Using this policy change in spatial lag IV regressions, we find that institutions like counties and jointly used administrations yield significant positive tax interactions whereas geographical neighbors do not react to each other. Common local media trigger tax policy interactions as well. Short-lived reform effects support our findings that social learning within certain networks intensifies tax rate interactions via coordination of local decision makers.

Suggested Citation

  • Blesse, Sebastian & Martin, Thorsten, 2016. "Let's stay in touch - Evidence on the role of social learning in local tax interactions," Annual Conference 2016 (Augsburg): Demographic Change 145614, Verein für Socialpolitik / German Economic Association.
  • Handle: RePEc:zbw:vfsc16:145614
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    Cited by:

    1. Ivo Bischoff & Simon Melch & Eva Wolfschuetz, 2019. "Does tax competition drive cooperation in local economic development policies? Evidence on inter-local business parks in Germany," MAGKS Papers on Economics 201906, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).

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    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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