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Taxation and the International Mobility of Inventors

Author

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  • Ufuk Akcigit
  • Salomé Baslandze
  • Stefanie Stantcheva

Abstract

We study the effect of top tax rates on "superstar" inventors' international mobility since 1977, using panel data on inventors from the US and European Patent Offices. We exploit the differential impact of changes in top tax rates on inventors of different qualities. Superstar inventors' location choices are significantly affected by top tax rates. In our preferred specification, the elasticity to the net-of-tax rate of the number of domestic superstar inventors is around 0.03, while that of foreign superstar inventors is around 1. These elasticities are larger for inventors in multinational companies. An inventor is less sensitive to taxes in a country if his company performs a higher share of its research there.

Suggested Citation

  • Ufuk Akcigit & Salomé Baslandze & Stefanie Stantcheva, 2016. "Taxation and the International Mobility of Inventors," American Economic Review, American Economic Association, vol. 106(10), pages 2930-2981, October.
  • Handle: RePEc:aea:aecrev:v:106:y:2016:i:10:p:2930-81
    Note: DOI: 10.1257/aer.20150237
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Alejandro Esteller & Amedeo Piolatto & Matthew D. Rablen, 2016. "Taxing high-income earners: tax avoidance and mobility," IFS Working Papers W16/07, Institute for Fiscal Studies.
    2. Julio López Laborda & Fernando Rodrigo Sauco, 2017. "Movilidad de los contribuyentes de rentas altas en respuesta a las diferencias regionales en los impuestos personales," Studies on the Spanish Economy eee2017-28, FEDEA.
    3. Krieger, Tim & Renner, Laura & Ruhose, Jens, 2018. "Long-Term Relatedness between Countries and International Migrant Selection," GLO Discussion Paper Series 205, Global Labor Organization (GLO).
    4. Matthias Parey & Jens Ruhose & Fabian Waldinger & Nicolai Netz, 2017. "The Selection of High-Skilled Emigrants," The Review of Economics and Statistics, MIT Press, vol. 99(5), pages 776-792, December.
    5. Aghion, Philippe & Akcigit, Ufuk & Bergeaud, Antonin & Blundell, Richard William & Hémous, David, 2015. "Innovation and Top Income Inequality," CEPR Discussion Papers 10659, C.E.P.R. Discussion Papers.
    6. Dechezlepretre, Antoine & Einiö, Elias & Martin, Ralf & Nguyen, Kieu-Trang & Reenen, John Van, 2016. "Do tax incentives for research increase firm innovation? An RD design for R&D," LSE Research Online Documents on Economics 66428, London School of Economics and Political Science, LSE Library.
    7. Enrico Moretti & Daniel J. Wilson, 2017. "The Effect of State Taxes on the Geographical Location of Top Earners: Evidence from Star Scientists," American Economic Review, American Economic Association, vol. 107(7), pages 1858-1903, July.
    8. Ugo Troiano, 2017. "Intergovernmental Cooperation and Tax Enforcement," NBER Working Papers 24153, National Bureau of Economic Research, Inc.
    9. Martinez, Isabel Z., 2016. "Beggar-Thy-Neighbour Tax Cuts: Mobility after a Local Income and Wealth Tax Reform in Switzerland," Annual Conference 2016 (Augsburg): Demographic Change 145643, Verein für Socialpolitik / German Economic Association.
    10. Alex Bell & Raj Chetty & Xavier Jaravel & Neviana Petkova & John Van Reenen, 2017. "Who Becomes an Inventor in America? The Importance of Exposure to Innovation," CEP Discussion Papers dp1519, Centre for Economic Performance, LSE.
    11. Aghion, Philippe & Akcigit, Ufuk & Hyytinen, Ari & Toivanen, Otto, 2017. "The social origins of inventors," LSE Research Online Documents on Economics 86619, London School of Economics and Political Science, LSE Library.
    12. Diego d'Andria, 2016. "Employed inventors, inter-firm mobility, bonus pay with multi-stage R&D processes, and optimal innovation policy," JRC Working Papers on Taxation & Structural Reforms 2016-02, Joint Research Centre (Seville site).
    13. d’Andria, Diego, 2016. "Why are researchers paid bonuses? On technology spillovers and market rivalry," Research Policy, Elsevier, vol. 45(10), pages 2105-2112.
    14. Diego d’Andria & Dimitris Pontikakis & Agnieszka Skonieczna, 2017. "Towards a European R&D Incentive? An assessment of R&D Provisions under a Common Corporate Tax Base," Taxation Papers 69, Directorate General Taxation and Customs Union, European Commission.
    15. Ugo Troiano, 2017. "Do Taxes Increase Economic Inequality? A Comparative Study Based on the State Personal Income Tax," NBER Working Papers 24175, National Bureau of Economic Research, Inc.
    16. Sachverständigenrat zur Begutachtung der Gesamtwirtschaftlichen Entwicklung (ed.), 2015. "Zukunftsfähigkeit in den Mittelpunkt. Jahresgutachten 2015/16," Annual Economic Reports / Jahresgutachten, German Council of Economic Experts / Sachverständigenrat zur Begutachtung der gesamtwirtschaftlichen Entwicklung, volume 127, number 201516, April.
    17. repec:wfo:wstudy:58545 is not listed on IDEAS
    18. Ross Levine & Chen Lin & Zigan Wang, 2018. "Toxic Emissions and Executive Migration," NBER Working Papers 24389, National Bureau of Economic Research, Inc.
    19. Roller, Marcus & Schmidheiny, Kurt, 2016. "Effective Tax Rates and Effective Progressivity in a Fiscally Decentralized Country," CEPR Discussion Papers 11152, C.E.P.R. Discussion Papers.
    20. Mare Sarr & Joëlle Noailly, 2017. "Innovation, Diffusion, Growth and the Environment: Taking Stock and Charting New Directions," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 66(3), pages 393-407, March.
    21. repec:oup:jecgeo:v:17:y:2017:i:5:p:1009-1038. is not listed on IDEAS
    22. Katrine Jakobsen & Kristian Jakobsen & Henrik Kleven & Gabriel Zucman, 2018. "Wealth Taxation and Wealth Accumulation: Theory and Evidence from Denmark," NBER Working Papers 24371, National Bureau of Economic Research, Inc.
    23. E. Mark Curtis & Ryan Decker, 2018. "Entrepreneurship and State Taxation," Finance and Economics Discussion Series 2018-003, Board of Governors of the Federal Reserve System (U.S.).

    More about this item

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H31 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Household
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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