Competing for capital when labor is heterogeneous

Yasuhiro Sato and Jacques Thisse ()

No 2005061, CORE Discussion Papers from Université catholique de Louvain, Center for Operations Research and Econometrics (CORE)

Abstract: This paper investigates the impacts of capital mobility and tax competition in a setting with imperfect matching between Þrms and workers. The small country always gains and the large country always loses from tax competition, thus implying tax competition leads to redistribution from the large to the small country. However, the large country always attains a higher utility than does the small country. These results imply that our model encapsulates both the Òimportance of being smallÓ as well as the Òimportance of being largeÓ. We also show that tax harmonization leads to redistribution from the large to the small country.

Keywords: Þscal competition; local labor markets; capital mobility (search for similar items in EconPapers)
JEL-codes: F21 H32 J31 (search for similar items in EconPapers)
Date: 2005-09-01
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http://www.core.ucl.ac.be/services/psfiles/dp05/dp2005_61.pdf (application/pdf)

Related works:
Working Paper: Competing for Capital When Labour is Heterogeneous (2007)
Working Paper: Competing for capital when labor is heterogeneous (2005)
Working Paper: Competing for capital when labor is heterogeneous (2006)
Journal Article: Competing for capital when labor is heterogeneous (2007)
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Persistent link: http://EconPapers.repec.org/RePEc:cor:louvco:2005061

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