期刊名称：CORE Discussion Papers / Center for Operations Research and Econometrics (UCL), Louvain
出版年度：2002
卷号：2002
出版社：Center for Operations Research and Econometrics (UCL), Louvain
摘要：Most models of tax competition assume full employment. Yet, actually one often observes
that fiscal competition, particularly when it is aimed at attracting investment, is motivated
by the concern of fighting unemployment and enhancing job creation. The present paper
considers a multicountry model with capital mobility and unemployment. Fiscal policy has
two opposing objectives:financing unemployment insurance and increasing employment. In
each country there is a majority vote on this policy.
The purpose of the paper is to analyse how opening borders to capital flows modifies
the median voter’s choice of the employment subsidy. Assuming that capital and labour
are complements, economic integration is shown to rise the employment subsidy with fixed
wages. This agrees with intuition as a larger employment subsidy attracts more capital.
However, when wages are set by labour unions economic integration can change the median
voter’s choice in either direction.
