The Taxing Deed of Globalization

This paper examines the effects of globalization on the distribution of worker-specific labor taxes using a unique set of tax calculators. We find a differential effect of higher trade and factor mobility on relative tax burdens in 1980–1993 versus 1994–2007 in the OECD. Prior to 1994, greater openn...

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Bibliographic Details
Published in:The American economic review 2019-02, Vol.109 (2), p.353-390
Main Authors: Egger, Peter H., Nigai, Sergey, Strecker, Nora M.
Format: Article
Language:English
Subjects:
Economic models
Globalization
Income taxes
Labor
Mobility
Openness
Social classes
Taxation
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Summary:This paper examines the effects of globalization on the distribution of worker-specific labor taxes using a unique set of tax calculators. We find a differential effect of higher trade and factor mobility on relative tax burdens in 1980–1993 versus 1994–2007 in the OECD. Prior to 1994, greater openness meant that higher income earners were taxed progressively more. However, after 1994, we document a globalization-induced rise in the labor income tax burden of the middle class, while the top 1 percent of workers and employees faced a reduction in their tax burden of 0.59–1.45 percentage points.
ISSN:0002-8282
1944-7981
DOI:10.1257/aer.20160600