How does economic integration change personal income taxation? : Evidence from a new index of potential labor mobility

Benjamin Protte

In this paper, I estimate the effect of increasing labor mobility on personal income tax schedules. I combine rich data on effective personal income tax levels in a panel of OECD countries for the period 1986-2005 with a new Index of Potential Labor Mobility. This index allows to tackle issues of reverse causality and potentially confounding effects from strategic competition. Estimates show that increasing labor mobility accounts for a considerable part of lower tax burdens. Furthermore, the reduction is found to be constant across brackets of taxable income.

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Year of publication:	November 2012
Authors:	Protte, Benjamin
Publisher:	Mannheim : Universität Mannheim, Department of Economics
Subject:	Personal Income \| Taxation \| Economic Integration \| Labor Mobility \| Einkommensteuer \| Income tax \| Wirtschaftsintegration \| Economic integration \| Arbeitsmobilität \| Labour mobility \| Steuerwettbewerb \| Tax competition \| Arbeitsmigranten \| Migrant workers \| Steuerreform \| Tax reform \| Theorie \| Theory