Onaran, Özlem ORCID: https://orcid.org/0000-0002-6345-9922 and Boesch, Valerie (2014) The effect of globalization on the distribution of taxes and social expenditures in Europe: do welfare state regimes matter? Environment and Planning A, 46 (2). pp. 373-397. ISSN 0308-518X (Print), 1472-3409 (Online) (doi:10.1068/a45370)

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Abstract

This paper estimates the effect of globalization on the implicit tax rates (ITRs) on capital income, labor income, and consumption, and the share of social protection expenditures in total public expenditures in Western and Eastern Europe. It tests the coexistence of efficiency and compensation effects of globalization on the expenditure and the revenue sides of government budgets. In Western Europe, globalization leads to an increase in social expenditures; however, these expenditures are to an increasing extent financed by taxes on labor. There are important differences between the welfare states. In the conservative regimes, both social expenditures and taxes on labor increase due to globalization. In the social-democratic regimes social expenditures are not affected by globalization, but the ITR on labor increases, whereas ITRs on capital and consumption decrease as a result of globalization. In the liberal regimes, the ITR on labor is rising, while social expenditures are declining. In the southern welfare regime globalization does not have any significant effects on the distribution of taxes or social spending. In Eastern Europe, in the Baltic states globalization leads to a decrease in social spending, whereas in the other Central and Eastern European New Member States (postcommunist European regimes) there is an upward convergence in social spending due to globalization. The ITRs on consumption decrease due to globalization in the postcommunist European regimes, whereas in the Baltic states there is no robust significant effect of globalization on taxes.

Item Type:	Article
Additional Information:	[1] Acknowledgement (funding): Support from the Austrian Science Fund (FWF) Project Nr. F2008 is acknowledged.
Uncontrolled Keywords:	globalization, social expenditures, implicit tax rates, welfare regimes
Subjects:	H Social Sciences > HB Economic Theory H Social Sciences > HD Industries. Land use. Labor H Social Sciences > HJ Public Finance
Faculty / School / Research Centre / Research Group:	Faculty of Business Faculty of Business > Department of International Business & Economics Faculty of Business > Institute of Political Economy, Governance, Finance and Accountability (IPEGFA) > Greenwich Political Economy Research Centre (GPERC)
Related URLs:	Publisher
Last Modified:	04 Aug 2021 16:32
URI:	http://gala.gre.ac.uk/id/eprint/9433

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