Taxation and revenues of central places as the regulator of available human resources in manufacturing - related to the bid rent curve

Abstract

Ageing and shrinking of the European population will decrease the availability of human resources in manufacturing. Therefore, the wage policy will operate in an increasingly sensitive environment, which will need to be well understood and able to fast respond to its changes. To understand and forecast the attractiveness of manufacture companies and abilities to attract additional workers, it is not enough to study wage policy independently, but also to know the real estate market and the distance of areas from where we can attract new workers. It means, therefore, wage policy should be tied to the location, real estate market and fiscal policy of a city in which the company and the real estate market are in order to achieve the optimum effect in finding new employees. In the paper, we show how useful it is to analyse the bid rent curve of the housing market at the central places through the changes of parameters in a gravity model. In such a model, the municipalities are considered as the regional centres, where different regional centres compete for new workers. Namely, the municipalities represent essential cells, competing with the other municipalities in the total economic area. A successful fiscal policy leads regions, and local communities along the path of balanced and environmentally friendly long-term growth or a steady decline analysed through the bid rent curves, but also influence the availability of human resources. The paper discusses the impact of changes in the wages, property taxes and municipal revenues on the bid rent curve and attractiveness for migrants. Therefore, the indicators evaluated through the changes of parameters in a gravity model, which are subject of the changed wages and taxation policy, gives proper forecasting of the future dynamics. From all these interactions the inflow of new workers can be forecasted, and the appropriate wage policy can be chosen as the regulator of available human resources.