The relationship between firm mobility and tax level: Empirical evidence of fiscal competition between local governments

Fredrik Carlsen, Bjørg Langset and Jorn Rattso

Discussion Papers from Statistics Norway, Research Department

Abstract: The mobility of the tax base may influence fiscal outcomes. The many theoretical contributions about the role of mobility are not matched by empirical evidence. Existing studies address strategic interaction between governments, but have little to say about mobility. We introduce a new measure of mobility conditions based on the geographic profit variability of industrial sectors. The econometric analysis shows a systematic negative relationship between mobility conditions and tax level among municipalities in Norway. The analysis takes into account neighborhood effects in a spatial model, and the endogeneity of mobility conditions is handled with instrumental variables.

Keywords: Fiscal competition; mobility; local taxation (search for similar items in EconPapers)
JEL-codes: C21 H71 H72 H73 (search for similar items in EconPapers)
Date: 2005-06
New Economics Papers: this item is included in nep-pbe and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (31)

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Journal Article: The relationship between firm mobility and tax level: Empirical evidence of fiscal competition between local governments (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:ssb:dispap:424

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