Let's stay in touch - evidence on the role of social learning in local tax interactions

Sebastian Blesse and Thorsten Martin

No 15-081, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: This paper exploits detailed information on local political and socioeconomic networks and a reform of local fiscal equalization in North Rhine-Westphalia (NRW) to identify the role of learning in local tax rate interactions. Using this policy change in spatial lag IV regressions, we find that institutions like counties and jointly used administrations yield significant positive tax interactions whereas geographical neighbors do not react to each other. Common local media trigger tax policy interactions as well. Short-lived reform effects support our findings that social learning within certain networks intensifies tax rate interactions via coordination of local decision makers.

Keywords: Tax mimicking; Local business tax; Social learning; Institutions; Tax competition; Fiscal equalization schemes (search for similar items in EconPapers)
JEL-codes: H20 H71 H77 (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-pbe, nep-soc and nep-ure
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Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Let's stay in touch - Evidence on the role of social learning in local tax interactions (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:15081

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