1. Equalization payment
... is the same across regions, free migration of labor would result in an efficient allocation of labor. With migration costs, efficient labor allocation is that the marginal product of labor net of migration costs be equalized across provinces. Once provinces are collecting taxes and providing public services in a decentralized federation, free migration of labor is no longer efficient. A person's real ... consumption taxes, and payroll taxes; taking these taxes all together, residence-based taxes are proportional to income. Thus high-income provinces collect more taxes than low-income pr...
- Word Count: 2179
- Approx Pages: 9
- Has Bibliography
- Grade Level: Undergraduate