Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/107313
Authors: 
Kessing, Sebastian
Lipatov, Vilen
Zoubek, Jens Malte
Year of Publication: 
2014
Series/Report no.: 
CESifo Working Paper 5152
Abstract: 
Regional productivity differences provide scope for productivity-enhancing labor mobility. Redistribution reduces relocation incentives through higher taxes or lower transfers. Combining an intensive labor supply margin with an extensive, productivity-enhancing migration margin, we determine how regional inequality and labor mobility affect optimal redistribution. Simulations using the productivity differences between rural and urban regions in the US indicate that optimal marginal tax rates are reduced by several percentage points if productivity enhancing migration is taken into account. Additionally, we study optimal regionally differentiated taxation.
Subjects: 
optimal taxation
redistribution
regional inequality
migration
multi-dimensional screening
delayed optimal control
JEL: 
H11
J45
R12
Document Type: 
Working Paper

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