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Migration And The Welfare State: Political-Economy Perspective On Tax Competition

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  • Assaf Razin

    (Department of Economics)

Abstract

The paper revisit the issue of whether tax competition is a race to the bottom. I analyze tax competion among a continuum of competing host countries facing an upward†sloping supply of would be igrants. Capital move freely across the host country economies. I show how the fiscal burden of migration brings out a tax competition equilibrium whereby taxes on labor and capital income are higher than under a coordination equilibrium.I then introduce foreign direct investment and show how it counteract the forces for high taxation.

Suggested Citation

  • Assaf Razin, 2013. "Migration And The Welfare State: Political-Economy Perspective On Tax Competition," 2013 Meeting Papers 48, Society for Economic Dynamics.
    • Handle: RePEc:red:sed013:48
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    References listed on IDEAS

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    1. Eric Hanushek & Ludger Woessmann, 2012. "Do better schools lead to more growth? Cognitive skills, economic outcomes, and causation," Journal of Economic Growth, Springer, vol. 17(4), pages 267-321, December.
    2. Razin, Assaf & Sadka, Efraim & Cohen, Alon, 2009. "The Skill Composition of Migration and the Generosity of the Welfare State," CEPR Discussion Papers 7185, C.E.P.R. Discussion Papers.
    3. George J. Borjas, 2021. "Self-Selection and the Earnings of Immigrants," World Scientific Book Chapters, in: Foundational Essays in Immigration Economics, chapter 4, pages 69-91, World Scientific Publishing Co. Pte. Ltd..
    4. De Giorgi, Giacomo & Pellizzari, Michele, 2009. "Welfare migration in Europe," Labour Economics, Elsevier, vol. 16(4), pages 353-363, August.
    Full references (including those not matched with items on IDEAS)

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