Arbeitspapier

Unionisation triggers tax incentives to attract foreign direct investment

This paper analyses tax competition between a unionised and a non-unionised country for the location of an outside firm. We show that unionisation offers an extra incentive for the government to attract a foreign competitor to a concen- trated domestic market, in order to affect the behaviour of the domestic union. This results in the unionised country's government offering a tax discount (or a subsidy premium) to the outside firm in excess of what is needed to compensate the investor for the higher union wage. In equilibrium, therefore, the unionised country can attract the outside firm even if it has other location disadvantages, such as a smaller home market.

Sprache
Englisch

Erschienen in
Series: BGPE Discussion Paper ; No. 52

Klassifikation
Wirtschaft
Business Taxes and Subsidies including sales and value-added (VAT)
State and Local Government; Intergovernmental Relations: Interjurisdictional Differentials and Their Effects
Labor-Management Relations, Trade Unions, and Collective Bargaining: Public Policy
Thema
tax competition
trade unions
foreign direct investment

Ereignis
Geistige Schöpfung
(wer)
Haufler, Andreas
Mittermaier, Ferdinand
Ereignis
Veröffentlichung
(wer)
Friedrich-Alexander-Universität Erlangen-Nürnberg, Bavarian Graduate Program in Economics (BGPE)
(wo)
Nürnberg
(wann)
2008

Handle
Letzte Aktualisierung
10.03.2025, 11:43 MEZ

Datenpartner

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Objekttyp

  • Arbeitspapier

Beteiligte

  • Haufler, Andreas
  • Mittermaier, Ferdinand
  • Friedrich-Alexander-Universität Erlangen-Nürnberg, Bavarian Graduate Program in Economics (BGPE)

Entstanden

  • 2008

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