Labor Market Integration and Fiscal Competition

Sergii Kiiashko and Paweł Kopiec ()

Journal of Money, Credit and Banking, 2022, vol. 54, issue S1, 157-185

Abstract: This paper studies the long‐run impact of international labor mobility on a union of countries with an integrated labor market. We build a multicountry model populated by overlapping generations of households with endogenous cross‐country migration flows. Independent governments use fiscal measures to compete for labor. The model is calibrated to match the empirical economic and migration patterns in the European Union. We find that the fiscal‐competition motive has a quantitatively significant impact on optimal fiscal policy, decreasing the average debt‐to‐GDP ratio by 12 percentage points (p.p.) and the average labor income tax by 1 p.p. relative to the no‐competition scenario.

Date: 2022
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://doi.org/10.1111/jmcb.12897

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wly:jmoncb:v:54:y:2022:i:s1:p:157-185

Access Statistics for this article

Journal of Money, Credit and Banking is currently edited by Robert deYoung, Paul Evans, Pok-Sang Lam and Kenneth D. West

More articles in Journal of Money, Credit and Banking from Blackwell Publishing
Bibliographic data for series maintained by Wiley Content Delivery ().