Resource title

Efficiency Properties of Labor Taxation in a Spatial Model of Restricted Labor Mobility

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Resource description

We examine the efficiency properties of labor taxation. A spatial model of an economy is introduced whose key feature is a new approach to restricted labor mobility. We characterize the efficient allocation of labor and properties of a decentralized equilibrium. An efficient allocation of labor can be compatible with marginal productivity differentials stemming from binding mobility restrictions. We investigate two scenarios of labor taxation (firm-specific taxes and countryspecific taxes) and in both setups we give a complete characterization of the cases for which there is scope for redistribution without affecting effciency. Finally, we discuss the applicability of our model in the context of the place of employment and place of residence principle of taxation.

Resource author

Patrik Guggenberger, Ashok Kaul, Martin Kolmar

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Resource publish date

Resource language

eng

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text/html

Resource resource URL

http://hdl.handle.net/10419/21140

Resource license

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