Labour Mobility and Fiscal Coordination: Setting Growth Agenda for an Economic Union

Assaf Razin and Chi-Wa Yuen

No 1342, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: Using a human-capital-based growth model, we show the essential role of labour mobility and cross-country tax harmonization in equalizing income levels of countries that start off from different initial income positions. Knowledge spillovers cum labour mobility are the driving forces behind the income level equalization process. In the absence of tax harmonization within an economic union, equality of income levels is not achievable. Coordination of educational subsidies necessary for the internalization of knowledge spillovers may or may not be necessary. These considerations constitute the basis for our efficient growth agenda for an economic union such as the European Union.

Keywords: Capital Mobility; Cross-Country Income Level Equality; Education Subsidies; Human Capital; Knowledge Spillovers; Labour Mobility; Tax Harmonization (search for similar items in EconPapers)
JEL-codes: E21 E32 F33 H30 O30 O40 (search for similar items in EconPapers)
Date: 1996-02
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Citations: View citations in EconPapers (2)

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