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Title:Fiscal Competition, Capital-Skill Complementarity, and the Composition of Public Spending PDF Logo
Authors:Borck, Rainald
Issue Date:2005
Series/Report no.:DIW-Diskussionspapiere 504
Abstract:Following Keen and Marchand (1997), the paper analyses the effect of fiscal competition on the composition of public spending in a model where capital and skilled workers are mobile while low skilled workers are immobile. Taxes are levied on capital and labour. Each group of workers benefits from a different kind of public good. Mobility of skilled workers provides an incentive for jurisdictions to spend ?too much? on public goods benefitting the skilled and ?too little? on those benefitting low skilled workers. In the case of capital-skill complementarity, this incentive is strengthened. The analysis is then extended to allow for mobility of unskilled labour.
Subjects:Tax competition
capital skill complementarity
public spending
JEL:J24
H77
J61
Document Type:Working Paper
Appears in Collections:DIW-Diskussionspapiere
Publikationen von Forscherinnen und Forschern des DIW

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