IDEAS home Printed from https://ideas.repec.org/p/nbr/nberwo/16545.html
   My bibliography  Save this paper

Taxation and International Migration of Superstars: Evidence from the European Football Market

Author

Listed:
  • Henrik Kleven
  • Camille Landais
  • Emmanuel Saez

Abstract

This paper analyzes the effects of top earnings tax rates on the international migration of football players in Europe. We construct a panel dataset of top earnings tax rates, football player careers, and club performances in the first leagues of 14 Western European countries since 1985. We identify the effects of top earnings tax rates on migration using a number of tax and institutional changes: (a) the 1995 Bosman ruling which liberalized the European football market, (b) top tax rate reforms within countries, and (c) special tax schemes offering preferential tax rates to immigrant football players. We start by presenting reduced-form graphical evidence showing large and compelling migration responses to country-specific tax reforms and labor market regulation. We then develop a multinomial regression framework to exploit all sources of tax variation simultaneously. Our results show that (i) the overall location responses to the net-of-tax rate is positive and large, with an elasticity of the number of foreign players to the net-of-tax rate around one (and an elasticity of the number of domestic players around .15), (ii) location elasticities are even larger at the top of the ability distribution, but negative at the bottom due to ability sorting effects, and (iii) cross-tax effects of foreign players on domestic players (and vice versa) are negative and quite strong due to displacement effects. Those results can be rationalized in a simple model of migration and taxation with rigid labor demand.

Suggested Citation

  • Henrik Kleven & Camille Landais & Emmanuel Saez, 2010. "Taxation and International Migration of Superstars: Evidence from the European Football Market," NBER Working Papers 16545, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:16545
    Note: LS PE
    as

    Download full text from publisher

    File URL: http://www.nber.org/papers/w16545.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Marko Terviö, 2006. "Transfer Fee Regulations and Player Development," Journal of the European Economic Association, MIT Press, vol. 4(5), pages 957-987, September.
    2. Feldstein, Martin & Wrobel, Marian Vaillant, 1998. "Can state taxes redistribute income?," Journal of Public Economics, Elsevier, vol. 68(3), pages 369-396, June.
    3. David E. Wildasin, 2005. "Fiscal Competition," Working Papers 2005-05, University of Kentucky, Institute for Federalism and Intergovernmental Relations.
    4. David E. Wildasin, 1998. "Factor Mobility and Redistributive Policy: Local and International Perspectives," Palgrave Macmillan Books, in: Peter Birch Sørensen (ed.), Public Finance in a Changing World, chapter 6, pages 151-192, Palgrave Macmillan.
    5. Blundell, Richard & Macurdy, Thomas, 1999. "Labor supply: A review of alternative approaches," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 27, pages 1559-1695, Elsevier.
    6. Wilson, John Douglas, 1999. "Theories of Tax Competition," National Tax Journal, National Tax Association;National Tax Journal, vol. 52(2), pages 269-304, June.
    7. Emmanuel Saez & Manos Matsaganis & Panos Tsakloglou, 2012. "Earnings Determination and Taxes: Evidence From a Cohort-Based Payroll Tax Reform in Greece," The Quarterly Journal of Economics, Oxford University Press, vol. 127(1), pages 493-533.
    8. Peter Antonioni & John Cubbin, 2000. "The Bosman Ruling and the Emergence of a Single Market in Soccer Talent," European Journal of Law and Economics, Springer, vol. 9(2), pages 157-173, March.
    9. Cremer, Helmuth & et al, 1996. "Mobility and Redistribution: A Survey," Public Finance = Finances publiques, , vol. 51(3), pages 325-352.
    10. Emmanuel Saez & Joel Slemrod & Seth H. Giertz, 2012. "The Elasticity of Taxable Income with Respect to Marginal Tax Rates: A Critical Review," Journal of Economic Literature, American Economic Association, vol. 50(1), pages 3-50, March.
    11. Feess, Eberhard & Muehlheusser, Gerd, 2003. "Transfer fee regulations in European football," European Economic Review, Elsevier, vol. 47(4), pages 645-668, August.
    12. Bernd Frick, 2007. "The Football Players' Labor Market: Empirical Evidence From The Major European Leagues," Scottish Journal of Political Economy, Scottish Economic Society, vol. 54(3), pages 422-446, July.
    13. Harrie A. A Verbon, 2007. "Migrating Football Players, Transfer Fees and Migration Controls," CESifo Working Paper Series 2004, CESifo.
    14. Wilson John Douglas, 1995. "Mobile Labor, Multiple Tax Instruments, and Tax Competition," Journal of Urban Economics, Elsevier, vol. 38(3), pages 333-356, November.
    15. Justin M. Ross & Robert R. Dunn, 2007. "The Income Tax Responsiveness Of The Rich: Evidence From Free Agent Major League Baseball All‐Stars," Contemporary Economic Policy, Western Economic Association International, vol. 25(4), pages 639-648, October.
    16. Kirchgassner, Gebhard & Pommerehne, Werner W., 1996. "Tax harmonization and tax competition in the European Union: Lessons from Switzerland," Journal of Public Economics, Elsevier, vol. 60(3), pages 351-371, June.
    17. Wilson, John Douglas, 1999. "Theories of Tax Competition," National Tax Journal, National Tax Association, vol. 52(n. 2), pages 269-304, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Martinez, Isabel Z., 2016. "Beggar-Thy-Neighbour Tax Cuts: Mobility after a Local Income and Wealth Tax Reform in Switzerland," VfS Annual Conference 2016 (Augsburg): Demographic Change 145643, Verein für Socialpolitik / German Economic Association.
    2. David Wildasin, 2008. "Public Finance in an Era of Global Demographic Change: Fertility Busts, Migration Booms, and Public Policy," Working Papers 2008-02, University of Kentucky, Institute for Federalism and Intergovernmental Relations.
    3. Wilson, John Douglas & Wildasin, David E., 2004. "Capital tax competition: bane or boon," Journal of Public Economics, Elsevier, vol. 88(6), pages 1065-1091, June.
    4. Sören Blomquist & Luca Micheletto, 2009. "Nonlinear Income Taxation And Matching Grants In A Federation With Decentralized In-Kind Transfers," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 50(2), pages 543-575, May.
    5. Wildasin, David E., 2003. "Fiscal competition in space and time," Journal of Public Economics, Elsevier, vol. 87(11), pages 2571-2588, October.
    6. David E. Wildasin, 2000. "Factor mobility and fiscal policy in the EU: policy issues and analytical approaches," Economic Policy, CEPR;CES;MSH, vol. 15(31), pages 338-378.
    7. Henrik Jacobsen Kleven & Camille Landais & Esben Schultz, 2014. "Migration and Wage Effects of Taxing Top Earners: Evidence from the Foreigners' Tax Scheme in Denmark," The Quarterly Journal of Economics, Oxford University Press, vol. 129(1), pages 333-378.
    8. Wildasin, David E., 2011. "Fiscal competition for imperfectly-mobile labor and capital: A comparative dynamic analysis," Journal of Public Economics, Elsevier, vol. 95(11), pages 1312-1321.
    9. Martínez, Isabel Z., 2022. "Mobility responses to the establishment of a residential tax haven: Evidence from Switzerland," Journal of Urban Economics, Elsevier, vol. 129(C).
    10. Thomas Liebig & Patrick A. Puhani & Alfonso Sousa‐Poza, 2007. "Taxation And Internal Migration—Evidence From The Swiss Census Using Community‐Level Variation In Income Tax Rates," Journal of Regional Science, Wiley Blackwell, vol. 47(4), pages 807-836, October.
    11. Helmut Seitz, 2003. "Fiskalföderalismus in Deutschland: Probleme und Reformbedarf am Beispiel der Finanzbeziehungen zwischen Bund und Ländern," Vierteljahrshefte zur Wirtschaftsforschung / Quarterly Journal of Economic Research, DIW Berlin, German Institute for Economic Research, vol. 72(3), pages 349-360.
    12. David E. Wildasin, 2003. "Fiscal Competition: An Introduction," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 5(2), pages 169-176, April.
    13. Gwenael Piaser, 2003. "Labor Mobility and Income Tax Competition," Public Economics 0302002, University Library of Munich, Germany.
    14. Bernd Frick, 2009. "Globalization and Factor Mobility," Journal of Sports Economics, , vol. 10(1), pages 88-106, February.
    15. Tidiane Ly, 2018. "Sub-metropolitan tax competition with household and capital mobility," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 25(5), pages 1129-1169, October.
    16. Zodrow, George R, 2003. "Tax Competition and Tax Coordination in the European Union," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 10(6), pages 651-671, November.
    17. Wallace E. Oates & Wallace E. Oates, 2004. "Fiscal Competition and European Union: Contrasting Perspectives," Chapters, in: Environmental Policy and Fiscal Federalism, chapter 10, pages 182-194, Edward Elgar Publishing.
    18. Lee, Kangoh, 2002. "Factor Mobility and Income Redistribution in a Federation," Journal of Urban Economics, Elsevier, vol. 51(1), pages 77-100, January.
    19. Alejandro Esteller & Amedeo Piolatto & Matthew D. Rablen, 2016. "Taxing high-income earners: tax avoidance and mobility," IFS Working Papers W16/07, Institute for Fiscal Studies.
    20. Brueckner, Jan K. & Saavedra, Luz A., 2001. "Do Local Governments Engage in Strategic Property-Tax Competition?," National Tax Journal, National Tax Association;National Tax Journal, vol. 54(2), pages 203-230, June.

    More about this item

    JEL classification:

    • H24 - Public Economics - - Taxation, Subsidies, and Revenue - - - Personal Income and Other Nonbusiness Taxes and Subsidies
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:nbr:nberwo:16545. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: the person in charge (email available below). General contact details of provider: https://edirc.repec.org/data/nberrus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.