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The efficiency of fiscal measures in preventing out migration from North Finland
[journal article]
Abstract In this paper we introduce a computable general equilibrium (CGE) model for the Finnish regional economy, RegFin. This multi-sector and interregional model characterizes economic activity in the regions of Lappi, Pohjois-Pohjanmaa, Kainuu, Keski-Pohjanmaa and the rest of Finland. Unemployment and ne... view more
In this paper we introduce a computable general equilibrium (CGE) model for the Finnish regional economy, RegFin. This multi-sector and interregional model characterizes economic activity in the regions of Lappi, Pohjois-Pohjanmaa, Kainuu, Keski-Pohjanmaa and the rest of Finland. Unemployment and net migration are determined endogenously within the model. We consider the macroeconomic effects of a regional policy applied to North Finland that is similar to tax reforms which have been implemented in Norway. The key feature of the policy concerns regionally differentiated tax rates. Tax incentives affect individual choices regarding both migration and employment. We also study a value-added tax reform where labour costs are exempted from the tax base. Our simulations seem to indicate that the regional differentiation of the social security payments of the employers and the value-added tax reform could be effective tools of regional policy.... view less
Classification
Area Development Planning, Regional Research
Labor Market Research
Public Finance
Free Keywords
payroll taxation, value-added taxation; Computable General Equilibrium (CGE) modelling; RegFin regional model
Document language
English
Publication Year
2010
Page/Pages
p. 465-475
Journal
Regional Studies, 44 (2010) 4
DOI
https://doi.org/10.1080/00343400802508786
Status
Postprint; peer reviewed
Licence
PEER Licence Agreement (applicable only to documents from PEER project)