Abstract
We study the impact of a policy change in the Netherlands that reduced
preferential tax treatment duration for high-skilled migrants arriving from specific countries in certain years. Utilizing comprehensive tax and population data, we document substantial tax-induced emigration responses, primarily driven by the top 1% of earners. Highly mobile individuals within the top 5% also emigrate sooner, particularly to competing countries offering tax-breaks to attract skilled workers. Crucially, we uncover no change in mobility behavior among lower-earning workers. The increased tax receipts from lower-income individuals who remain offset the loss from fleeing high earners, making the policy fiscally cost-neutral.
preferential tax treatment duration for high-skilled migrants arriving from specific countries in certain years. Utilizing comprehensive tax and population data, we document substantial tax-induced emigration responses, primarily driven by the top 1% of earners. Highly mobile individuals within the top 5% also emigrate sooner, particularly to competing countries offering tax-breaks to attract skilled workers. Crucially, we uncover no change in mobility behavior among lower-earning workers. The increased tax receipts from lower-income individuals who remain offset the loss from fleeing high earners, making the policy fiscally cost-neutral.
| Original language | English |
|---|---|
| Place of Publication | Amsterdam |
| Publisher | Tinbergen Institute |
| Number of pages | 70 |
| Publication status | Published - 18 Sept 2023 |
Publication series
| Series | Tinbergen Institute Discussion Papers |
|---|---|
| Number | 23-053/V |
JEL classifications
- f22 - International Migration
- h31 - Fiscal Policies and Behavior of Economic Agents: Household
- j61 - "Geographic Labor Mobility; Immigrant Workers"
Keywords
- Taxation
- immigration,
- labor income
- Netherlands