How does Economic Integration Change Personal Income Taxation? Evidence from a new Index of Potential Labor Mobility

Benjamin Protte

No 12-20, Working Papers from University of Mannheim, Department of Economics

Abstract: In this paper, I estimate the effect of increasing labor mobility on personal income tax schedules. I combine rich data on effective personal income tax levels in a panel of OECD countries for the period 1986-2005 with a new Index of Potential Labor Mobility. This index allows to tackle issues of reverse causality and potentially confounding effects from strategic competition. Estimates show that increasing labor mobility accounts for a considerable part of lower tax burdens. Furthermore, the reduction is found to be constant across brackets of taxable income.

Keywords: Personal Income; Taxation; Economic Integration; Labor Mobility (search for similar items in EconPapers)
JEL-codes: F22 H24 J61 (search for similar items in EconPapers)
Date: 2012
New Economics Papers: this item is included in nep-acc, nep-mig and nep-pbe
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Persistent link: https://EconPapers.repec.org/RePEc:mnh:wpaper:32590

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