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Effects of capital taxation on economies with different demographic changes: short term versus long term

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  • Akira Yakita

Abstract

We examine the effect of source-based capital taxation on capital accumulation in countries with endogenous fertility and free international capital mobility. When fertility is constant, a tax cut accelerates domestic capital accumulation through international arbitrage and exerts negative influences on the welfare of a foreign country. In contrast, with endogenous fertility, a tax cut by an economy with a higher tax rate and exporting capital may deter capital accumulation and hence lower the welfare in not only domestic but also foreign economies in the long term, although the tax cut may accelerate domestic capital accumulation in the short term. Copyright Springer-Verlag Berlin Heidelberg 2014

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  • Akira Yakita, 2014. "Effects of capital taxation on economies with different demographic changes: short term versus long term," Journal of Population Economics, Springer;European Society for Population Economics, vol. 27(1), pages 257-273, January.
    • Handle: RePEc:spr:jopoec:v:27:y:2014:i:1:p:257-273
    DOI: 10.1007/s00148-013-0480-x
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    Cited by:

    1. Madoka Muroishi & Akira Yakita, 2021. "Agglomeration economies, congestion diseconomies, and fertility dynamics in a two-region economy," Letters in Spatial and Resource Sciences, Springer, vol. 14(1), pages 51-63, April.
    2. Masaya Shintani & Masaya Yasuoka, 2021. "Child Care Policy and Capital Mobility," Economics Bulletin, AccessEcon, vol. 41(2), pages 398-404.

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    More about this item

    Keywords

    International capital mobility; Source-based capital taxation; Endogenous fertility; Demographic change; F21; H25; J14;
    All these keywords.

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • J14 - Labor and Demographic Economics - - Demographic Economics - - - Economics of the Elderly; Economics of the Handicapped; Non-Labor Market Discrimination

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