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Strategic Interactions in income taxes: A tax study focusing on local labor markets in Sweden
Uppsala University, Disciplinary Domain of Humanities and Social Sciences, Faculty of Social Sciences, Department of Economics.
2015 (English)Independent thesis Advanced level (degree of Master (Two Years)), 20 credits / 30 HE creditsStudent thesis
Abstract [en]

One of the central messages in the strategic interaction literature is that local governments engage in competition for the same tax base across jurisdictions through reduction in tax rates and public expenditure levels (Wilson, 1999). The purpose of this study is to test whether strategic interaction exists among Swedish municipalities, based on a panel dataset of income tax rates between 1993 and 2013. The study uses spatial economics and an instrumental variable approach to evaluate the impact of strategic interaction. I, like earlier research, find strong evidence of strategic interaction using a contiguity weight matrix1. The study also presents some evidence which indicates that the strategic interaction is stronger between municipalities which share the same local labor market.

Place, publisher, year, edition, pages
Keyword [en]
Strategic interactions, Tax competition, Yardstick competition, Local labor markets, Strategic behaviour, Income taxes, Spatial economics, Spatial lag, Contiguity matrix, Block matrix
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URN: urn:nbn:se:uu:diva-256430OAI: oai:DiVA.org:uu-256430DiVA: diva2:825331
Available from: 2015-06-23 Created: 2015-06-23 Last updated: 2015-06-23Bibliographically approved

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