Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/203133
Authors: 
Henkel, Marcel
Seidel, Tobias
Südekum, Jens
Year of Publication: 
2019
Series/Report no.: 
DICE Discussion Paper 322
Abstract: 
Many countries shift substantial public resources across jurisdictions to mitigate spatial economic disparities. We use a general equilibrium model with multiple asymmetric regions, labor mobility, and costly trade to carve out the aggregate implications of fiscal transfers. Calibrating the model for Germany, we find that transfers indeed deliver smaller disparities across regions. This comes at the cost of lower national output, however, because activity is diverted away from core cities and towards remote areas with low productivity. But despite this output loss, national welfare may still increase, because the transfer scheme countervails over-congestion in large cities.
Subjects: 
fiscal equalization
regional transfers
migration
spatial economics
JEL: 
F15
R12
R13
R23
ISBN: 
978-3-86304-321-6
Document Type: 
Working Paper

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