Migration Incentives and Taxation: Do Marginal Taxes Matter?
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.
References listed on IDEAS
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- Mirrlees, J. A., 1982. "Migration and optimal income taxes," Journal of Public Economics, Elsevier, vol. 18(3), pages 319-341, August.
- Andersen, Torben M. & Sandemann Rasmussen, Bo, 1999. "Effort, taxation and unemployment1," Economics Letters, Elsevier, vol. 62(1), pages 97-103, January.
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- 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.
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