The papers in this special issue contribute to a rapidly growing literature that departs from traditional public economics by emphasizing that governments (including subnational governments, but also, increasingly, national governments) operate in an environment where labor and capital flow...

This paper analyzes government policy when random shocks affect particular industries, occupations or regions. Workers can freely choose and industry or occupation ex ante, and can relocate at a cost, once uncertainty is resolved. The policy instruments available are per capita taxes and...

This paper investigates the effects of labor market integration, in the form of worker mobility, in a model with long-term labor contracts that lead to wage rigidities and unemployment. Reflecting the interdependence of regional labor markets, we develop a general-equilibrium framework where the...

Subnational governments are assuming greater fiscal responsibility in many developing and transition countries. There is concern, however, that fiscal decentralization may weaken fiscal discipline -that local authorities may undertake commitments or incur debt obligations that subsequently...