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Optimal Tax and Expenditure Policy in the Presence of Emigration: Are Credit Restrictions Important?
Umeå University, Faculty of Social Sciences, Umeå School of Business and Economics (USBE), Economics.
Umeå University, Faculty of Social Sciences, Umeå School of Business and Economics (USBE), Economics.
Luleå Tekniska Universitet.
2014 (English)In: Indian Growth and Development Review, ISSN 1753-8254, E-ISSN 1753-8262, Vol. 7, no 2, 98-117 p.Article in journal (Refereed) Published
Abstract [en]

Purpose - Empirical studies have found an 'inverted U-curve' relationship between emigration and per capita income. In this paper, a theoretical underpinning for this phenomenon is presented based on credit restrictions. The implications for tax policy are also analyzed.Design/methodology/approach - Using an intertemporal general equilibrium model, the authors characterize how the presence of an 'inverted U-curve' relationship between emigration and per capita income will influence the optimal tax and expenditure policy in a country where agents have the option to move abroad.Findings - Among the results it is shown that if age dependent taxes are available, the presence of an 'inverted U-curve' provides an incentive to tax young labor harder, but old labor less hard, than otherwise.

Place, publisher, year, edition, pages
Emerald Group Publishing Limited, 2014. Vol. 7, no 2, 98-117 p.
Keyword [en]
Optimal taxation, labor mobility, intertemporal consumer choice
National Category
Economics
Research subject
Economics
Identifiers
URN: urn:nbn:se:umu:diva-93196DOI: 10.1108/IGDR-09-2012-0040Scopus ID: 2-s2.0-84913599099OAI: oai:DiVA.org:umu-93196DiVA: diva2:746368
Funder
The Jan Wallander and Tom Hedelius Foundation
Available from: 2014-09-12 Created: 2014-09-12 Last updated: 2017-12-05Bibliographically approved

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CiteExportLink to record
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Citation style
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  • Other style
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  • de-DE
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  • en-US
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  • nn-NO
  • nn-NB
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Output format
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  • asciidoc
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