TY - JOUR
T1 - Efficiency properties of labor taxation in a spatial model of restricted labor mobility
AU - Guggenberger, Patrik
AU - Kaul, Ashok
AU - Kolmar, Martin
N1 - Funding Information:
We would like to thank Anat Bracha, Friedrich Breyer, Nicola Fuchs, Geoffrey Garrett, Roland Ismer, Benoit Mercereau, John E. Roemer, Guenther G. Schulze, Konrad Stahl, and two anonymous referees for helpful comments. The first author thanks the Cowles Foundation for research support via a Cowles Prize.
PY - 2002
Y1 - 2002
N2 - We examine the efficiency properties of labor taxation. A spatial model of an economy is introduced whose key feature is a new approach to restricted labor mobility. We characterize the efficient allocation of labor and properties of a decentralized equilibrium. An efficient allocation of labor can be compatible with marginal productivity differentials stemming from binding mobility restrictions. We investigate two scenarios of labor taxation (firm-specific taxes and country-specific taxes) and in both setups we give a complete characterization of the cases for which there is scope for redistribution without affecting efficiency. Finally, we discuss the applicability of our model in the context of the place of employment and place of residence principle of taxation.
AB - We examine the efficiency properties of labor taxation. A spatial model of an economy is introduced whose key feature is a new approach to restricted labor mobility. We characterize the efficient allocation of labor and properties of a decentralized equilibrium. An efficient allocation of labor can be compatible with marginal productivity differentials stemming from binding mobility restrictions. We investigate two scenarios of labor taxation (firm-specific taxes and country-specific taxes) and in both setups we give a complete characterization of the cases for which there is scope for redistribution without affecting efficiency. Finally, we discuss the applicability of our model in the context of the place of employment and place of residence principle of taxation.
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U2 - 10.1016/S0166-0462(01)00091-6
DO - 10.1016/S0166-0462(01)00091-6
M3 - Article
AN - SCOPUS:0036078259
SN - 0166-0462
VL - 32
SP - 447
EP - 473
JO - Regional Science and Urban Economics
JF - Regional Science and Urban Economics
IS - 4
ER -