Globalisation squeezes the public sector - is it so obvious?

Torben M. Andersen and Allan Sørensen

Economics Working Papers from Department of Economics and Business Economics, Aarhus University

Abstract: It is widely perceived that globalization squeezes public sector activities by making taxation more costly. This is attributed to increased factor mobility and to a more elastic labour demand due to improved scope for relocation of production and thus employment across countries. We argue that this consensus view overlooks that gains from trade unambiguously work to lower the marginal costs of public funds, and moreover that globalization via increased trade in intermediaries may actually lower the labour demand elasticity.

Keywords: Globalization; marginal costs of public funds; labour taxation (search for similar items in EconPapers)
JEL-codes: F15 F4 H20 H40 (search for similar items in EconPapers)
Pages: 13
Date: 2008-09-01
New Economics Papers: this item is included in nep-lab, nep-opm and nep-pbe
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https://repec.econ.au.dk/repec/afn/wp/08/wp08_08.pdf (application/pdf)

Related works:
Journal Article: Globalisation squeezes the public sector—is it so obvious? (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:aah:aarhec:2008-08

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