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Tax Incentives and Return Migration

Author

Listed:
  • Bassetto, Jacopo

    (University of Bologna)

  • Ippedico, Giuseppe

    (University of Nottingham)

Abstract

Brain drain is a key policy concern for many countries. In this paper we study whether tax incentives are an effective policy to attract high-skilled expatriates back to their home country, exploiting a generous income tax break for Italian returnees. Using administrative data and a Triple Differences design, we find that eligible individuals are 27% more likely to return to Italy. Additionally, we uncover significant effects throughout the wage distribution, revealing that tax-induced migration is a broad phenomenon beyond top earners. A cost-benefit analysis shows that the tax scheme can pay for itself by targeting young high-skilled individuals.

Suggested Citation

  • Bassetto, Jacopo & Ippedico, Giuseppe, 2024. "Tax Incentives and Return Migration," IZA Discussion Papers 17224, Institute of Labor Economics (IZA).
    • Handle: RePEc:iza:izadps:dp17224
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    More about this item

    Keywords

    brain drain; tax incentives; return migration; personal income tax;
    All these keywords.

    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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