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Optimal Taxation with Fixed Wages and Induced Migration

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  • Heady, Christopher J

Abstract

This paper addresses the issue of optimal taxation in an economy wi th induced internal migration. It extends the Diamond-Mirrlees model, in that households base their decisions on observed quantities, as well as consumer prices, and the work of J. N. Bhagwati and T. N. Srinivasan on the Harris-Todaro model, by considering the costs of raising revenue to pay for policies. It shows how the tax rules and Bhagwati-Srinivasan' s wage subsidy policy have to be modified. It also shows that concern for income distribution does not necessarily counteract a presumption in favor of placing heavy tax burdens on unsuccessful migrants. Copyright 1988 by Royal Economic Society.

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  • Heady, Christopher J, 1988. "Optimal Taxation with Fixed Wages and Induced Migration," Oxford Economic Papers, Oxford University Press, vol. 40(3), pages 560-574, September.
    • Handle: RePEc:oup:oxecpp:v:40:y:1988:i:3:p:560-74
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    Cited by:

    1. Mohamed Amara & Mohamed Ayadi & Hatem Jemmali, 2019. "Rural–urban migration and income disparity in Tunisia: A decomposition analysis," Papers in Regional Science, Wiley Blackwell, vol. 98(2), pages 1053-1083, April.
    2. Saracoglu, Durdane Sirin & Roe, Terry L., 2013. "Internal Migration, Structural Change, and Economic Growth," Conference papers 332322, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.
    3. Lall, Somik V. & Selod, Harris & Shalizi, Zmarak, 2006. "Rural-urban migration in developing countries : a survey of theoretical predictions and empirical findings," Policy Research Working Paper Series 3915, The World Bank.
    4. Ivanic, Maros, 2004. "Implications of Household Saving on Poverty," Conference papers 331269, Purdue University, Center for Global Trade Analysis, Global Trade Analysis Project.

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