In this paper we study Brain Drain (BD) and Fiscal Competition (FC) in a unified framework that is specific for the European Union (EU). Potential mobility of educated workers can increase the degree of FC through taxation or the provision of public education. An increase in FC can be caused by competition among different jurisdictions that aim to attract educated workers. When the importance of FC increases, then the European States may employ FC as a new policy tool. We propose a simple model which is able to capture different scenarios: Brain Gain (when BD may increase average productivity in the source economy); Brain Drain (when there is unidirectional flow of highly skilled workers that is welfare-deteriorating in the source economy); Migration Competition (when the regions have not high differences in the productivity and they compete attracting educated workers); Fiscal Competition (when jurisdictions compete either to attract a mobile tax base). This simple model helps us to explain several policies implemented by European regions.

P. Giannoccolo (2010). Brain Drain and Fiscal Competition: a Theoretical Model for Europe. INTERNATIONAL JOURNAL OF ECONOMICS, 4 (1) june 2010, 18-45.

Brain Drain and Fiscal Competition: a Theoretical Model for Europe

GIANNOCCOLO, PIERPAOLO
2010

Abstract

In this paper we study Brain Drain (BD) and Fiscal Competition (FC) in a unified framework that is specific for the European Union (EU). Potential mobility of educated workers can increase the degree of FC through taxation or the provision of public education. An increase in FC can be caused by competition among different jurisdictions that aim to attract educated workers. When the importance of FC increases, then the European States may employ FC as a new policy tool. We propose a simple model which is able to capture different scenarios: Brain Gain (when BD may increase average productivity in the source economy); Brain Drain (when there is unidirectional flow of highly skilled workers that is welfare-deteriorating in the source economy); Migration Competition (when the regions have not high differences in the productivity and they compete attracting educated workers); Fiscal Competition (when jurisdictions compete either to attract a mobile tax base). This simple model helps us to explain several policies implemented by European regions.
2010
P. Giannoccolo (2010). Brain Drain and Fiscal Competition: a Theoretical Model for Europe. INTERNATIONAL JOURNAL OF ECONOMICS, 4 (1) june 2010, 18-45.
P. Giannoccolo
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/11585/89349
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