Efficiency properties of labor taxation in a spatial model of restricted labor mobility
Journal
Regional Science and Urban Economics
ISSN
0166-0462
ISSN-Digital
1879-2308
Type
journal article
Date Issued
2002-07-01
Author(s)
Abstract
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 (firmspecific 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.
Language
English
Keywords
Restricted labor mobility
Efficient allocation of labor
Labor taxation
HSG Classification
contribution to scientific community
Refereed
No
Publisher
Elsevier
Publisher place
Amsterdam
Volume
32
Number
4
Start page
447
End page
473
Pages
27
Subject(s)
Division(s)
Eprints ID
223633