The traditional normative literature on fiscal federalism argues that redistributive policies should be centralized in order to avoid welfare- or tax-induced migration. However, recent evidence shows that even in a setup where the progressivity of the income tax schedule is centralized to an...

The traditional normative literature on fiscal federalism argues that redistributive policies should be centralized in order to avoid welfare- or tax-induced migration. However, recent evidence shows that even in a setup where the progressivity of the income tax schedule is centralized to an...

Fiscal decentralization leads to a more efficient allocation of public fund and restricts the government to exploit the tax base. However, standard theory also suggests strong negative distributional effects and thus, centralized redistribution is proposed. This trade-off between efficiency and...