Principles of Political Economy and the Taxation of Nations: Econometric and Machine-Learning Evaluation of Tariffs

63 Pages Posted: 22 Mar 2021 Last revised: 9 Sep 2021

See all articles by James Ming Chen

James Ming Chen

Michigan State University - College of Law

Thomas Poufinas

Democritus University of Thrace - Department of Economics

Charalampos Agiropoulos

University of Piraeus - Faculty of International and European Studies; University of Piraeus - Department of Economics

George Galanos

University of Piraeus - Faculty of International and European Studies

Date Written: February 23, 2021

Abstract

Demography affects the ability of countries to manage their debt levels and to make macroeconomic policy. By the same token, the demographic attributes of labor influence political decisions among nations, including international trade policy. In particular, the free movement of labor is a bedrock principle of the European Union. That legal guarantee has prompted one country to leave the Union, even as it inspires other countries to join.

This study investigates the influence of (labor) demographics on tariffs in 45 OECD and non-OECD countries. A series of econometric models reveals evidence that the population and labor force may influence tariff levels. By contrast, migration does not. Income per capita and consumption affect tariff rates. Machine-learning methods confirm conclusions reached through conventional econometrics and shed further light on the relationship between tariff levels and their hypothesized predictors. The absence of a significant relationship between tariffs and migration undermines the common political assumption that tariff and immigration policy are mutually reinforcing levers of international policy.

Keywords: tariffs, demographics, labor, migration, population, machine learning

JEL Classification: C33, C45, F14, F62

Suggested Citation

Chen, James Ming and Poufinas, Thomas and Agiropoulos, Charalampos and Galanos, George, Principles of Political Economy and the Taxation of Nations: Econometric and Machine-Learning Evaluation of Tariffs (February 23, 2021). 2020 Michigan State Law Review 1361, Available at SSRN: https://ssrn.com/abstract=3791744

James Ming Chen (Contact Author)

Michigan State University - College of Law ( email )

318 Law College Building
East Lansing, MI 48824-1300
United States

Thomas Poufinas

Democritus University of Thrace - Department of Economics ( email )

69100 Komotini
Greece

Charalampos Agiropoulos

University of Piraeus - Faculty of International and European Studies ( email )

Greece

University of Piraeus - Department of Economics ( email )

Athens
Greece

George Galanos

University of Piraeus - Faculty of International and European Studies ( email )

Greece

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