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Tax Incentives and Return Migration

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Listed:
  • Jacopo Bassetto
  • Giuseppe Ippedico

Abstract

We study how tax incentives affect the return migration of high-skilled expatriates to their home country, exploiting a generous income tax break for returnees in Italy. Using administrative data and a Triple-Difference design, we estimate a migration elasticity to the average net-of-tax rate just below one. Responses are sizable across the upper half of the earnings distribution, indicating that tax-induced migration is not limited to top earners. A cost-benefit analysis reveals that, while costly in the short term, the scheme pays for itself in present value if a sufficiently large fraction of returnees remains after the scheme elapses.

Suggested Citation

  • Jacopo Bassetto & Giuseppe Ippedico, 2026. "Tax Incentives and Return Migration," RFBerlin Discussion Paper Series 26097, ROCKWOOL Foundation Berlin (RFBerlin).
    • Handle: RePEc:crm:wpaper:26097
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    Keywords

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    JEL classification:

    • 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
    • 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

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