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Abstract
This article analyses tax competition between a unionised and a non-unionised country for the location of an outside firm. We show that unionisation increases the incentive for the government to attract a foreign investor, in order to affect the behaviour of the domestic union. This results in the unionised country’s government offering a tax discount (or a subsidy premium) to the outside firm in excess of what is needed to compensate the investor for the higher union wage. In equilibrium, therefore, the unionised country attracts the foreign investment, even if it has no other location advantages.
Item Type: | Journal article |
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Faculties: | Economics Economics > Chairs > Seminar for Economic Policy |
Subjects: | 300 Social sciences > 330 Economics |
Language: | English |
Item ID: | 20404 |
Date Deposited: | 15. Apr 2014, 08:59 |
Last Modified: | 04. Nov 2020, 13:01 |
Available Versions of this Item
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Unionisation triggers tax incentives to attract foreign direct investment. (deposited 08. May 2008, 08:20)
- Unionisation Triggers Tax Incentives to Attract Foreign Direct Investment. (deposited 15. Apr 2014, 08:59) [Currently Displayed]