Resource title

Welfare Policies, Labour Taxation and International Integration

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Resource description

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 negative externality 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.

Resource author

Torben M. Andersen

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Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/21130

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Adapt according to the presented license agreement and reference the original author.