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Migration and Fiscal Competition within a Union

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  • Assaf Razin
  • Efraim Sadka

Abstract

We develop a stylized EU-type model of a union consisting of rich, capital-abundant and high productivity countries, and poor, capital-scarce and low productivity countries. We address two main issues: the efficiency of tax competition and the effect of factor mobility on the size of the welfare state. We identify a fiscal externality which impairs the efficiency of tax competition. We also demonstrate how capital mobility within the union strengthens the competition over migrants from outside of the union.

Suggested Citation

  • Assaf Razin & Efraim Sadka, 2013. "Migration and Fiscal Competition within a Union," NBER Working Papers 19282, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:19282
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    More about this item

    JEL classification:

    • F2 - International Economics - - International Factor Movements and International Business
    • H2 - Public Economics - - Taxation, Subsidies, and Revenue

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