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Sharing the Spoils: Taxing International Human Capital Flows

Author

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  • Mihir A. Desai

    ()

  • Devesh Kapur

    ()

  • John McHale

    ()

Abstract

This paper argues that cross-border human capital flows from developing countries to developed countries over the next half-century will demand a new set of policy responses from developing countries. The paper examines the forces that are making immigration policies more skill-focused, the effect of both flows (emigration) and stocks (diasporas) on the source countries, and the range of taxation instruments available to source countries to manage the consequences of those flows. This paper emphasizes the example of India, a large source country for human capital flows, and the United States, an important destination for these human capital flows and an example of how a country can tax its citizens abroad. In combination, these examples point to the significant advantage to developing countries of potential tax schemes for managing the flows and stocks of citizens who reside abroad. Finally, this paper concludes with a research agenda for the many questions raised by the prospect of large flows of skilled workers and the policy alternatives, including tax instruments, available to source countries.

Suggested Citation

  • Mihir A. Desai & Devesh Kapur & John McHale, 2004. "Sharing the Spoils: Taxing International Human Capital Flows," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 11(5), pages 663-693, September.
  • Handle: RePEc:kap:itaxpf:v:11:y:2004:i:5:p:663-693
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    Citations

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    Cited by:

    1. Petreski, Marjan & Jovanovic, Branimir, 2013. "Do Remittances Reduce Poverty and Inequality in the Western Balkans? Evidence from Macedonia," MPRA Paper 51413, University Library of Munich, Germany.
    2. Richard B. Freeman, 2006. "People Flows in Globalization," Journal of Economic Perspectives, American Economic Association, vol. 20(2), pages 145-170, Spring.
    3. Hrushikesh Mallick, 2008. "Do remittances impact the economy? Some empirical evidences from a developing economy," Centre for Development Studies, Trivendrum Working Papers 407, Centre for Development Studies, Trivendrum, India.
    4. Docquier, Frederic & Rapoport, Hillel, 2004. "Skilled migration: the perspective of developing countries," Policy Research Working Paper Series 3382, The World Bank.
    5. Tosun, Mehmet S., 2011. "Demographic Divide and Labor Migration in the Euro-Mediterranean Region," IZA Discussion Papers 6188, Institute for the Study of Labor (IZA).
    6. Ramana Nanda & Tarun Khanna, 2010. "Diasporas and Domestic Entrepreneurs: Evidence from the Indian Software Industry," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 19(4), pages 991-1012, December.
    7. Desai, Mihir A. & Kapur, Devesh & McHale, John & Rogers, Keith, 2009. "The fiscal impact of high-skilled emigration: Flows of Indians to the U.S," Journal of Development Economics, Elsevier, vol. 88(1), pages 32-44, January.
    8. Panu Poutvaara, 2004. "Public Education in an Integrated Europe: Studying to Migrate and Teaching to Stay?," CESifo Working Paper Series 1369, CESifo Group Munich.
    9. Rodrik, Dani, 2004. "Industrial Policy for the Twenty-First Century," Working Paper Series rwp04-047, Harvard University, John F. Kennedy School of Government.
    10. Hanson, Gordon H., 2010. "International Migration and the Developing World," Handbook of Development Economics, Elsevier.
    11. Hrushikesh Mallick, 2009. "Do Remittances Impact the Economy? Some Empirical Evidences from A Developing Economy," Working Papers id:2199, eSocialSciences.
    12. Maureen Mackintosh & Kwadwo Mensah & Leroi Henry & Michael Rowson, 2006. "Aid, restitution and international fiscal redistribution in health care: implications of health professionals' migration," Journal of International Development, John Wiley & Sons, Ltd., vol. 18(6), pages 757-770.
    13. Richard P. C. Brown & Fabrizio Carmignani & Ghada Fayad, 2013. "Migrants’ Remittances and Financial Development: Macro- and Micro-Level Evidence of a Perverse Relationship," The World Economy, Wiley Blackwell, vol. 36(5), pages 636-660, May.
    14. Docquier, Frédéric, 2006. "Brain Drain and Inequality Across Nations," IZA Discussion Papers 2440, Institute for the Study of Labor (IZA).
    15. Blanca Moreno-Dodson & Sanket Mohapatra & Dilip Ratha, 2012. "Migration, Taxation, and Inequality," World Bank Other Operational Studies 10038, The World Bank.
    16. D'Costa, Anthony P., 2006. "The International Mobility of Technical Talent: Trends and Development Implications," WIDER Working Paper Series 143, World Institute for Development Economic Research (UNU-WIDER).
    17. Chaudhuri, Sumanta & Mattoo, Aaditya & Self, Richard, 2004. "Moving people to deliver services : how can the WTO help?," Policy Research Working Paper Series 3238, The World Bank.
    18. Piotr Stryszowski, 2006. "Brains for Capital. The Effect of Brain Drain on Investments and Convergence," DEGIT Conference Papers c011_049, DEGIT, Dynamics, Economic Growth, and International Trade.
    19. Okoye, Dozie, 2016. "Can brain drain be good for human capital growth? Evidence from cross-country skill premiums and education costs," Economic Analysis and Policy, Elsevier, vol. 49(C), pages 74-99.
    20. Wilson, John Douglas, 2011. "Brain-drain taxes for non-benevolent governments," Journal of Development Economics, Elsevier, vol. 95(1), pages 68-76, May.

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