Global Competition for Mobile Resources: Implications for Equity, Efficiency and Political Economy

International integration of markets for labor and capital hasfar-reaching policy implications in economies where governmentspursue extensive programs of redistribution through tax andtransfer policies. The large fiscal impacts that result frommovement of high- and low-income populations, as well as ofcapital, affect the benefits, costs, and political payoffs ofredistributive policies, creating incentives for fiscal competitionthat may limit the extent of redistribution over time. Migrationand capital flows are dynamic adjustment mechanisms, analysisof which can shed light on the consequences of structural changessuch as globalization of factor markets and EU enlargement.(JEL codes: H0, J0)