The effects of labour unions on international capital tax competition
Carl Gaigne and
Stephane Riou ()
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Nelly Exbrayat: GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - Université de Lyon - UJM - Université Jean Monnet [Saint-Étienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique, UJM - Université Jean Monnet [Saint-Étienne]
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We analyze the impact of labour market rigidities on tax competition betweentwo imperfectly integrated countries. Following a shift from a competitive to a unionizedlabour market in both countries, the capital tax can be adjusted upward in the countrywith the less rigid labour market, whereas the capital tax is always adjusted downward inthe other country. Moreover, by reducing the labour cost differential between countries,trade liberalization gives rise to tax and welfare convergences. Finally, when a countryadopts a flexible labour market, the unionized country may attract the majority of capital.
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Published in Canadian Journal of Economics / Revue Canadienne d'Économique, Wiley, 2012, 45 (4), pp.1480-1503. 〈10.1111/j.1540-5982.2012.01746.x〉
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Journal Article: The effects of labour unions on international capital tax competition (2012)
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