Who gains from capital market integration? Tax competition between unionized and non-unionized countries

Hikaru Ogawa, Yasuhiro Sato and Toshiki Tamai

Canadian Journal of Economics, 2016, vol. 49, issue 1, 76-110

Abstract: The welfare effects of capital market integration are examined under a model of tax competition with two asymmetric countries. The asymmetry is expressed through the labour market: one country has a perfect labour market whereas the other country's labour market is unionized. Our results indicate that the welfare effects of capital market integration differ depending on whether governments are active or passive in attracting capital. In the absence of active governments, capital market integration benefits the country with a competitive labour market whereas it harms the unionized country. Capital market integration benefits both countries if governments are active and compete for mobile capital using taxes/subsidies.

JEL-codes: F15 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (14)

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Journal Article: Who gains from capital market integration? Tax competition between unionized and non‐unionized countries (2016)
Working Paper: Who gains from capital market integration: Tax competition between unionized and non-unionized countries (2010)
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