How does Economic Integration Change Personal Income Taxation? Evidence from a new Index of Potential Labor Mobility

Protte, Benjamin

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URL:	https://ub-madoc.bib.uni-mannheim.de/32590
URN:	urn:nbn:de:bsz:180-madoc-325903
Document Type:	Working paper
Year of publication:	2012
The title of a journal, publication series:	Working Paper Series
Volume:	12-20
Place of publication:	Mannheim
Publication language:	English
Institution:	School of Law and Economics > VWL, insbes. Finanzwissenschaft u. Wirtschaftspolitik (Janeba)
MADOC publication series:	Department of Economics > Working Paper Series
Subject:	330 Economics
Classification:	JEL: H24 , F22 , J61,
Keywords (English):	Personal Income , Taxation , Economic Integration , Labor Mobility
Abstract:	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.