Fiscal Policy, Economic Integration and Unemployment

Wolfgang Eggert and Laszlo Goerke

No 1102, CESifo Working Paper Series from CESifo

Abstract: In this paper fiscal policy is examined for an open economy characterised by unemployment due to efficiency wages. We allow for capital and firm mobility in a model where the government chooses the level of wage, source-based capital and profit taxation. The taxing choices of governments are analyzed in scenarios which differ with respect to the constraints imposed on the set of available taxes and on the mobility of firms. As a general result, the welfare loss from labour market imperfections increases when tax bases become internationally mobile, which suggests an increasing relevance of domestic labour-market reforms when tax bases become global.

Keywords: taxation; efficiency wages; unemployment (search for similar items in EconPapers)
Date: 2003
New Economics Papers: this item is included in nep-pbe
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Citations: View citations in EconPapers (3)

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Working Paper: Fiscal Policy, Economic Integration and Unemployment (2003)
Working Paper: Fiscal Policy, Economic Integration and Unemployment
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_1102

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