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Is International Labour Mobility a Threat to the Welfare State? Evidence from Finland in the 1990s

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  • Jukka Pirttilä

    (Bank of Finland, Finland)

Abstract

This paper assesses the factors behind Finnish emigration and return migration in the 1990s. Logit-analysis using combined micro data from the labour force survey and emigration statistics in 1990–1999 reveals that, when controlling for other background characteristics, highly educated individuals are 5 times more prone to emigrate than individuals with secondary education only. There is no similar difference in the return migration propensities within individuals of different educational levels. Panel-data analysis based on country-level data on the migration destination countries of the (even highly educated) Finnish emigrants in 1990–2000 reveals, however, that migration has not been directed towards countries with low tax rates. These findings therefore suggest that while there is some evidence that the Finnish welfare state may suffer from the selection of emigration incidence on highly educated workforce, emigration has mainly been determined by other factors than potential tax competition on mobile labour.

Suggested Citation

  • Jukka Pirttilä, 2004. "Is International Labour Mobility a Threat to the Welfare State? Evidence from Finland in the 1990s," Finnish Economic Papers, Finnish Economic Association, vol. 17(1), pages 18-34, Spring.
  • Handle: RePEc:fep:journl:v:17:y:2004:i:1:p:18-34
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    References listed on IDEAS

    as
    1. Cremer, Helmuth & et al, 1996. "Mobility and Redistribution: A Survey," Public Finance = Finances publiques, , vol. 51(3), pages 325-352.
    2. de Mooij, Ruud A & Ederveen, Sjef, 2003. "Taxation and Foreign Direct Investment: A Synthesis of Empirical Research," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 10(6), pages 673-693, November.
    3. Borjas, George J & Bratsberg, Bernt, 1996. "Who Leaves? The Outmigration of the Foreign-Born," The Review of Economics and Statistics, MIT Press, vol. 78(1), pages 165-176, February.
    4. Rosanne Altshuler & Timothy J. Goodspeed, 2015. "Follow the Leader? Evidence on European and US Tax Competition," Public Finance Review, , vol. 43(4), pages 485-504, July.
    5. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Oxford University Press, vol. 58(2), pages 277-297.
    Full references (including those not matched with items on IDEAS)

    More about this item

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

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