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Migration Incentives and Taxation: Do Marginal Taxes Matter?

Author

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  • Bo Sandemann Rasmussen

    (Department of Economics, University of Aarhus, Denmark)

Abstract

Faced with ageing populations many European countries may be tempted to attract immigrants. One way to do this is to offer tax incentives. Since the decision to migrate is a discrete choice it should be average taxes that are important for the migration decision. If, however, the supply of working hours is endogenous it is shown that marginal taxes are also important for the migration decision, even after controlling for average taxes. Hence, countries interested in attracting immigrants can do so even without reducing average taxes by having less progressive tax systems than other countries.

Suggested Citation

  • Bo Sandemann Rasmussen, 2004. "Migration Incentives and Taxation: Do Marginal Taxes Matter?," Economics Working Papers 2004-7, Department of Economics and Business Economics, Aarhus University.
    • Handle: RePEc:aah:aarhec:2004-7
    as

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    File URL: https://repec.econ.au.dk/repec/afn/wp/04/wp04_07.pdf
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    References listed on IDEAS

    as
    1. Andersen, Torben M. & Sandemann Rasmussen, Bo, 1999. "Effort, taxation and unemployment1," Economics Letters, Elsevier, vol. 62(1), pages 97-103, January.
    2. Wilson, John D., 1980. "The effect of potential emigration on the optimal linear income tax," Journal of Public Economics, Elsevier, vol. 14(3), pages 339-353, December.
    3. Mirrlees, J. A., 1982. "Migration and optimal income taxes," Journal of Public Economics, Elsevier, vol. 18(3), pages 319-341, August.
    4. Bucovetsky, S., 2003. "Efficient migration and redistribution," Journal of Public Economics, Elsevier, vol. 87(11), pages 2459-2474, October.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Migration; average taxes; marginal taxes; labor supply; population ageing.;
    All these keywords.

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies

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