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Welfare Policies, Labour Taxation and International Integration

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  • Andersen, Torben M

Abstract

How will international integration affect welfare policies? This paper considers the possibilities of financing public sector activities (public consumption and social security expenses) by general (wage) taxation in an economy which becomes more integrated in international product markets. Even if labour is internationally immobile, the increased mobility of products and hence jobs implies a change in the distortions arising from taxes and social security contributions levied on labour income. Since financing of social security via general taxation involves a common resource problem the effects of international integration depend critically on the institutional structure of the labour market. This paper shows that increased international integration inducing more product market competition implies that it becomes more costly to maintain welfare systems financed by general taxation. Copyright 2003 by Kluwer Academic Publishers

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  • Andersen, Torben M, 2003. "Welfare Policies, Labour Taxation and International Integration," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 10(1), pages 43-62, January.
    • Handle: RePEc:kap:itaxpf:v:10:y:2003:i:1:p:43-62
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    Cited by:

    1. Torben Andersen & Allan Sørensen, 2011. "Globalisation squeezes the public sector—is it so obvious?," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 18(4), pages 369-382, August.
    2. Torben Andersen, 2008. "The Scandinavian model—prospects and challenges," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 15(1), pages 45-66, February.
    3. B. Merlevede & G. Rayp & S. Van Parys & T. Verbeke, 2011. "Do EU15 countries compete over labour taxes?," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 11/750, Ghent University, Faculty of Economics and Business Administration.
    4. Sokolovska, Olena, 2018. "Labor income taxation in open economies: current trends and options for reforms," MPRA Paper 86233, University Library of Munich, Germany.

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