Jordi Jofre, member of the IEB, awarded the grade “cum laude” for his thesis on models of fiscal competition and agglomeration economies

Jordi Jofre, a member of the Barcelona Institute of Economics (IEB), has been awarded the grade of Excellent “cum laude” for his PhD thesis ‘Tax Competition and Agglomeration Economies: Evidence from Spanish Municipalities’. Jofre tests several hypotheses derived from introducing agglomeration economies into tax competition models. He finds that high local tax rates – for instance, the Tax on Economic Activities (IAE) – have a negative effect on the economic activity of municipalities, and then analyses whether this effect is stronger or weaker in industries where agglomeration economies are particularly intense. 

Jofre concludes that, in a small municipality, agglomeration economies increase the role of local tax differentials. Tax reductions attract an initial group of companies; their arrival makes the municipality more attractive, and more companies decide to locate there. On the other hand, in a large municipality, agglomeration economies reduce the negative effect of taxes on the municipality’s economic activities. The point is that the advantages of being located in a larger municipality compensate for any local tax differential. Finally, the thesis shows that municipalities where companies agglomerate establish higher local tax rates, meaning that agglomeration economies are ‘taxable.’ 

The thesis was evaluated by a tribunal made up by Thiess Buettner of the University of Munich and Ifo Institute, who acted as President, Marius Brülhart of the University of Lausanne, and Elisabet Viladecans Marsal of the University of Barcelona and IEB, who acted as Secretary. In addition to the grade of Excellent cum laude, the thesis was also awarded a European Doctorate, which is given for theses written and defended in a European Union language that is not official in Spain. To qualify for this award, the candidate must have spent a research period in another European country during the preparation of the doctorate.