Mobility and tax competition when wages are endogenously determined

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Abstract

We study a model of tax competition where both skilled and unskilled workers are mobile and wages of workers are endogenously determined. When the demand for skilled labor is sufficiently elastic, the equilibrium tax rate is decreasing in the degree of mobility of unskilled workers; otherwise the former is increasing in the latter.

Original languageEnglish
Pages (from-to)347-353
Number of pages7
JournalEconomics Letters
Volume83
Issue number3
DOIs
Publication statusPublished - 2004 Jun 1
Externally publishedYes

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Keywords

  • Fiscal externality
  • Mobility
  • Redistribution
  • Tax competition

ASJC Scopus subject areas

  • Economics and Econometrics
  • Finance

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