Labor Taxes, Productivity and Tax Competition
Amartya Lahiri and
Satyajit Chatterjee ()
No 1298, 2010 Meeting Papers from Society for Economic Dynamics
Why are taxes higher in Europe than in the US? We propose that it stems from lesser competition across jurisdictions within Europe. We embed self-interested governments and tax competition into a standard neoclassical growth model with public goods. While greater jurisdictional competition reduces taxes it also reduces societal investment in public capital and thus often ends up reducing total factor productivity. We show that despite this deleterious effect on the level of productive public capital, tax competition ends up raising per capita output and welfare. We show evidence to support both our baseline assumption of lesser mobility in Europe relative to the US as well as for our predictions on productivity differences between the two.
References: Add references at CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Working Paper: Labor Taxes, Productivity and Tax Competition (2019)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:red:sed010:1298
Access Statistics for this paper
More papers in 2010 Meeting Papers from Society for Economic Dynamics Society for Economic Dynamics Marina Azzimonti Department of Economics Stonybrook University 10 Nicolls Road Stonybrook NY 11790 USA. Contact information at EDIRC.
Bibliographic data for series maintained by Christian Zimmermann ().