Should I stay or should I go?: the economic incentives of intergenerational taxes and transfers in Uruguay
Florencia Amábile () and
Rómulo A. Chumacero ()
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Florencia Amábile: Universidad de la República
Rómulo A. Chumacero: University of Chile
International Tax and Public Finance, 2023, vol. 30, issue 2, No 8, 493-524
Abstract This paper develops a business cycle model of a small open economy with heterogeneous agents and international labor mobility, with a particular focus on taxes and transfer policies. Migration occurs as a result of the maximization problem of families and, combined with remittances, makes consumption smoothing possible. This paper shows how transfers from the government to young people and elders, funded with distortionary taxes, prompt the migration of people of working age and, among them, some of the most skilled members of the economy. The model is calibrated to match labor mobility in various age–skill groups and aggregate cycle dynamics of the Uruguayan economy, including government transfers and migration volatility.
Keywords: Uruguay; Migration; Heterogeneous agents; DSGE; Transfers (search for similar items in EconPapers)
JEL-codes: E27 F22 H31 I25 (search for similar items in EconPapers)
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