Discussion Paper Details

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Title: The Taxing Deed of Globalization

Author(s): Peter Egger, Sergey Nigai and Nora Strecker

Publication Date: May 2016

Keyword(s): Globalization, Income taxes, International Trade, migration and Tax progressivity

Programme Area(s): International Trade and Regional Economics

Abstract: We examine the effects of globalization on the size and composition of tax revenues, worker-specific tax burdens, and effective average labor income tax rates using a unique international database on income tax calculators. We find that due to increasing mobility of firms and high-income workers, globalization led governments in OECD countries to seek tax revenues from alternative sources, specifically from employee-borne taxes paid by relatively less mobile middle-income workers. In 1994-2007, they experienced a globalization-induced rise in their personal income tax rate of around 1.5, whereas the top 1% of workers faced a reduction of approximately 1.5 percentage points.

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Bibliographic Reference

Egger, P, Nigai, S and Strecker, N. 2016. 'The Taxing Deed of Globalization'. London, Centre for Economic Policy Research.