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Competition for Migrants in a Federation: Tax or Transfer Competition?

23 Pages Posted: 26 Jan 2012  

Marko Koethenbuerger

ETH Zurich - Department of Management, Technology and Economics; KOF Swiss Economic Institute; CESifo (Center for Economic Studies and Ifo Institute)

Date Written: January 26, 2012

Abstract

The paper provides an equilibrium analysis of how countries compete for migrants. The type of competition (tax or transfer competition) depends on whether the competing countries have similar policy preferences. With symmetric preferences, countries compete in taxes for migrants. With asymmetric preferences, migration competition takes place in income support levels. The results are robust to the degree of mobility and to whether high-income or low-income households are mobile. The results are relevant, e.g., for federal policies that tackle inefficient migration competition and for evaluating whether a country may wish to adopt unilateral ‘migration-purchase’ policies.

Keywords: migration, redistribution, income taxation, government strategy, endogenous type of competition

JEL Classification: H700, J200, F200

Suggested Citation

Koethenbuerger, Marko, Competition for Migrants in a Federation: Tax or Transfer Competition? (January 26, 2012). CESifo Working Paper Series No. 3709. Available at SSRN: https://ssrn.com/abstract=1992231

Marko Koethenbuerger (Contact Author)

ETH Zurich - Department of Management, Technology and Economics ( email )

Weinbergstrasse 35
Zurich, 8092
Switzerland
+41 44 6325446 (Phone)

KOF Swiss Economic Institute ( email )

Zurich
Switzerland

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

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