The Influence of Labor Taxes on the Migration of Skilled Workers
AbstractThis paper investigates empirically the role of taxes on labor for the stock of expatriates and the migration flows of skilled workers. Given the increasing mobility of labour, especially of high-skilled people and expatriates, it is interesting to see to what extent labour income taxes and social security contributions determine migration flows. We collect data on personal income tax profiles for 49 economies and the year 2002. In particular, we determine the component of labor taxes which is borne by employers and the one that is borne byemployees, following the OECD’s Taxing Wages Approach. For the latter, we calculate the progressivity of personal income tax rates between the average wage and five times the average wage. This may be interpreted as the tax progression which is relevant for well-paid workers. Then, we use the personal income tax variables to estimate their effect on bilateral stocks of expatriates into OECD countries and the migration of skilled workers into these countries. Personal income tax rates turn out to have a robust negative effect on cross-border flows of skilled workers in the OECD.
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Bibliographic InfoPaper provided by CESifo Group Munich in its series CESifo Working Paper Series with number 2462.
Date of creation: 2008
Date of revision:
labor taxation; skilled workers; migration; expatriates;
Other versions of this item:
- Peter Egger & Doina Maria Radulescu, 2009. "The Influence of Labour Taxes on the Migration of Skilled Workers," The World Economy, Wiley Blackwell, vol. 32(9), pages 1365-1379, 09.
- 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
- J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
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