Fiscal Competition, Capital-Skill Complementarity, and the Composition of Public Spending - 10.1628/001522105776072799 - Mohr Siebeck
Economics

Rainald Borck

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

Section: Articles
FinanzArchiv (FA)

Volume 61 () / Issue 4, pp. 488-499 (12)

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Following Keen and Marchand (1997), the paper analyzes 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 labor. 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 benefiting the skilled and too little on those benefiting 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 labor.
Authors/Editors

Rainald Borck No current data available.