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Title:Efficiency Properties of Labor Taxation in a Spatial Model of Restricted Labor Mobility PDF Logo
Authors:Guggenberger, Patrik
Kaul, Ashok
Kolmar, Martin
Issue Date:2001
Series/Report no.:IZA Discussion paper series 287
Abstract: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.
Subjects:Restricted Labor Mobility
Efficient Allocation of Labor
Labor Taxation
JEL:H7
R5
J61
Document Type:Working Paper
Appears in Collections:IZA Discussion Papers, Forschungsinstitut zur Zukunft der Arbeit (IZA)

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