Competing for capital when labor is heterogeneous

Yasuhiro Sato and Jacques Thisse ()

No 2005045, Discussion Papers (ECON - Département des Sciences Economiques) from Université catholique de Louvain, Département des Sciences Economiques

Abstract: This paper investigates the impacts of capital mobility and tax competition in a setting with imperfect matching between firms 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. 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: fiscal competition; local labor markets; capital mobility (search for similar items in EconPapers)
JEL-codes: F21 H32 J31 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-pbe
Date: 2005-09-05
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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:ctl:louvec:2005045

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