Optimal Taxation under Regional Inequality

Sebastian Kessing, Vilen Lipatov and J. Malte Zoubek ()
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J. Malte Zoubek: University of Siegen

MAGKS Papers on Economics from Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung)

Abstract: We study how regional productivity differences and labor mobility shape optimal Mirrleesian tax-transfer schemes. When tax schedules are not allowed to differ across regions, productivity-enhancing inter-regional migration exerts a downward pressure on optimal marginal tax rates. When regionally differentiated taxation is allowed, marginal tax rates in high-(low-)productivity regions should be corrected downwards (upwards) relative to the benchmark without migration. Simulations of the productivity differences between metropolitan and other areas of the US indicate that migration affects the optimal tax-transfer schedule more strongly in the regionally differentiated rather than in the undifferentiated case.

Keywords: Optimal taxation; place-based redistribution; regional inequality; migration; multidimensional screening; delayed optimal control (search for similar items in EconPapers)
JEL-codes: H11 J45 R12 (search for similar items in EconPapers)
Pages: 42 pages
Date: 2020
New Economics Papers: this item is included in nep-cmp, nep-geo, nep-lma, nep-pbe and nep-ure
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Citations: View citations in EconPapers (7)

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http://www.uni-marburg.de/fb02/makro/forschung/mag ... /13-2020_kessing.pdf First 202013 (application/pdf)

Related works:
Journal Article: Optimal taxation under regional inequality (2020)
Working Paper: Optimal Taxation under Regional Inequality (2019)
Working Paper: Optimal Taxation under Regional Inequality (2015)
Working Paper: Optimal Taxation under Regional Inequality (2014)
Working Paper: Optimal taxation under regional inequality (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:mar:magkse:202013

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