Fiscal Policy, Economic Integration and Unemployment

No 937, IZA Discussion Papers from Institute of Labor Economics (IZA)

Abstract: In this paper fiscal policy is examined for an open economy characterised by unemployment due to efficiency wages. We allow for capital and firm mobility in a model where the government chooses the level of wage, source-based capital and profit taxation. The taxing choices of governments are analyzed in scenarios which differ with respect to the constraints imposed on the set of available taxes and on the mobility of firms. As a general result, the welfare loss from labour market imperfections increases when tax bases become internationally mobile, which suggests an increasing relevance of domestic labour-market reforms when tax bases become global.

Keywords: optimal taxation; efficiency wages; unemployment (search for similar items in EconPapers)
JEL-codes: H21 J41 J65 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2003-11
New Economics Papers: this item is included in nep-eec, nep-lab and nep-pbe
References: View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published - published in: Journal of Economics/Zeitschrift für Nationalökonomie, 2004, 82 (2), 137-167

Downloads: (external link)
https://docs.iza.org/dp937.pdf (application/pdf)

Related works:
Working Paper: Fiscal Policy, Economic Integration and Unemployment (2003)
Working Paper: Fiscal Policy, Economic Integration and Unemployment
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:iza:izadps:dp937

Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany

Access Statistics for this paper

More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().