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Do European Top Earners React to Labour Taxation Through Migration ?

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  • Mathilde Muñoz

    (PSE - Paris School of Economics - ENPC - École des Ponts ParisTech - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - UP1 - Université Paris 1 Panthéon-Sorbonne - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris sciences et lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement)

Abstract

This paper studies the effects of top income tax rates on top earners' migration, using a novel individual dataset on mobility representative of the entire population of 21 European countries. I exploit the differential effects of changes in top tax rates on individuals at different earnings levels. Top earners' location choices are significantly affected by top income tax rates. The elasticity of the number of top earners with respect to the net-of-tax rate is between 0.1 and 0.3; it is above one for foreigners. Migration elasticities differ widely across member states, leading to different incentives to implement beggar-thy-neighbour tax policies within Europe.

Suggested Citation

  • Mathilde Muñoz, 2021. "Do European Top Earners React to Labour Taxation Through Migration ?," PSE Working Papers halshs-03252899, HAL.
  • Handle: RePEc:hal:psewpa:halshs-03252899
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-03252899
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    References listed on IDEAS

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