Fiscal Competition, Capital-Skill Complementarity, and the Composition of Public Spending

Arbeitspapier

Following Keen and Marchand (1997), the paper analyses the effect of fiscal competition on the composition of public spending in a model where capital and skilled workers are mobile while low skilled workers are immobile. Taxes are levied on capital and labour. Each group of workers benefits from a different kind of public good. Mobility of skilled workers provides an incentive for jurisdictions to spend ?too much? on public goods benefitting the skilled and ?too little? on those benefitting low skilled workers. In the case of capital-skill complementarity, this incentive is strengthened. The analysis is then extended to allow for mobility of unskilled labour.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: DIW Discussion Papers ; No. 504

Classification and Topics

• Classification: Wirtschaft ; Human Capital; Skills; Occupational Choice; Labor Productivity ; Intergovernmental Relations; Federalism; Secession ; Geographic Labor Mobility; Immigrant Workers
• Subject: Tax competition ; capital skill complementarity ; public spending ; New-Keynesian Phillips Curve ; Betriebliche Preispolitik ; Preisstatistik ; Schätzung ; Welt

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Borck, Rainald
• Event: Veröffentlichung
• (who): Deutsches Institut für Wirtschaftsforschung (DIW)
• (where): Berlin
• (when): 2005

Further information

• Handle: http://hdl.handle.net/10419/18355
• Last update: 10.03.2025, 11:44 AM CET