Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/216653
Authors: 
Kessing, Sebastian G.
Lipatov, Vilen
Zoubek, J. Malte
Year of Publication: 
2020
Series/Report no.: 
MAGKS Joint Discussion Paper Series in Economics No. 13-2020
Abstract: 
We study how regional productivity differences and labor mobility shape optimal Mirrleesian tax-transfer schemes. When tax schedules are not allowed to differ across regions, productivity-enhancing inter-regional migration exerts a downward pressure on optimal marginal tax rates. When regionally differentiated taxation is allowed, marginal tax rates in high-(low-)productivity regions should be corrected downwards (upwards) relative to the benchmark without migration. Simulations of the productivity differences between metropolitan and other areas of the US indicate that migration affects the optimal tax-transfer schedule more strongly in the regionally differentiated rather than in the undifferentiated case.
Subjects: 
Optimal taxation
place-based redistribution
regional inequality
migration
multidimensional screening
delayed optimal control
JEL: 
H11
J45
R12
Document Type: 
Working Paper

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