Department of Economics and Business Economics

Globalisation squeezes the public sector - is it so obvious?

Research output: Working paperResearch

  • School of Economics and Management
It is widely perceived that globalization squeezes public sector activities
by making taxation more costly. This is attributed to increased
factor mobility and to a more elastic labour demand due to improved
scope for relocation of production and thus employment across countries.
We argue that this consensus view overlooks that gains from
trade unambiguously work to lower the marginal costs of public funds,
and moreover that globalization via increased trade in intermediaries
may actually lower the labour demand elasticity.
Original languageEnglish
Place of publicationAarhus
PublisherInstitut for Økonomi, Aarhus Universitet
Number of pages13
Publication statusPublished - 2008

    Research areas

  • Globalization, marginal costs of public funds, labour taxation

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ID: 12321764