It is often argued that tax competition may lead to a "race to the bottom". Such a race may hold indeed in the case of the pure case of factor mobility (such as capital mobility). However, in this paper we emphasize the unique feature of labor migration, that may nullify the "race to the bottom"...

We develop a stylized EU-type model of a union consisting of rich, capital-abundant and high productivity countries, and poor, capital-scarce and low productivity countries. We address two main issues: the efficiency of tax competition and the effect of factor mobility on the size of the welfare...

Over the years, there emerged two key policy differences between Europe and America, both welfare and migration-states. The former has more generous welfare state and more liberal migration policies than the latter. In this paper we attempt to provide a political-economy explanation for these...

Is global competition for mobile capital harmful (less public goods) or beneficial (less government waste)? This paper combines both aspects within a generalized version of the comparative public finance model (Persson, Roland and Tabellini, 2000) by introducing multiple countries and endogenous...

Using a human capital based growth model, we show the essential role of labor mobility and cross-country tax harmonization in equalizing income levels of countries that start off from different initial income positions. Knowledge spillovers cum labor mobility are the driving forces behind the...

We develop a political-economy model of economic union and compare the competion regime to the coordination regime. Key policy differences emerge between the two regimes: concerning the generosity of the welfare state and the skill composition of migration. We argue that the differences between...

This paper provides overview of recent work on migration and welfare state tax policies: 1. I survey the literature on the tax burden of migration. 2. I empirically identify the differential effect of the generosity of the welfare state on the skill composition of immigrants across the two...

This paper reconsiders the question of whether tax competition for mobile capital leads to tax rates on capital that are too low or too high from the combined viewpoint of the competing regions (or countries in an economic union). In contrast to standard models of tax competition, both commodity...

Basic economic theory identifies a number of efficiency gains that derive from international capital mobility. But just as free trade in goods, there is no guarantee that capital mobility makes everyone better off. Consequently, capital mobility may be politically unsustainable even though it...