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| Author: | Razin, A. Sadka, E. Swagel, P. |
| Title: | Tax burden and migration: a political economy theory and evidence |
| Journal: | Journal of Public Economics
2002 : AUG, VOL. 85:2, p. 167-190 |
| Index terms: | Taxation Political economy Migration |
| Language: | eng |
| Abstract: | The authors develop in this paper a theory which encompasses the existing literature, and provides a complementary channel linking the tax burden in the presence of migration to the 'fiscal leakage' from native-born to the migrants. In a stylized model of migration and human capital formation, the authors show, somewhat against the conventional wisdom, that low-skill immigration can lead to a lower tax burden and less redistribution than would be tha case with no immigration, even though migrants join the pro-tax/transfer coalition. Data on 11 European countries over period 1974-1992 are consistent with the implications of the theory: a higher share of low-education immigrants in the population leads to alower tax rate on labour income and less generous social transfers. |
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