CESifo Economic Studies Advance Access originally published online on February 23, 2006
CESifo Economic Studies 2006 52(1):61-110; doi:10.1093/cesifo/ifj003
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Global Competition for Mobile Resources: Implications for Equity, Efficiency and Political Economy
International integration of markets for labor and capital has far-reaching policy implications in economies where governments pursue extensive programs of redistribution through tax and transfer policies. The large fiscal impacts that result from movement of high- and low-income populations, as well as of capital, affect the benefits, costs, and political payoffs of redistributive policies, creating incentives for fiscal competition that may limit the extent of redistribution over time. Migration and capital flows are dynamic adjustment mechanisms, analysis of which can shed light on the consequences of structural changes such as globalization of factor markets and EU enlargement. (JEL codes: H0, J0)
* Martin School of Public Policy, University of Kentucky, Lexington, KY 40506-0027, USA, e-mail: dew{at}davidwildasin.us
Earlier versions of this article appeared under the titles "Economic Integration: Implications for Equity, Efficiency, Political Economy and the Organization of the Public Sector" (June, 2003) and "Labor and Capital Mobility: Implications for Equity, Efficiency and Political Economy" (May, 2005) and were presented at the Third Norwegian-German Seminar on Public Economics, Munich, and at the "Workshop on Fiscal Federalism: Decentralization, Governance and Economic Growth" at the Institut d'Economia de Barcelona. I am grateful to conference participants and to two referees for helpful comments but retain responsibility for any errors.