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Taxation and the International Mobility of Inventors

Listed author(s):
  • Ufuk Akcigit
  • Salomé Baslandze
  • Stefanie Stantcheva

This paper studies the effect of top tax rates on inventors' international mobility since 1977. We put special emphasis on “superstar” inventors, those with the most abundant and most valuable patents. We use panel data on inventors from the United States and European Patent Offices to track inventors' locations over time and combine it with international effective top tax rate data. We construct a detailed set of proxies for inventors' counterfactual incomes in each possible destination country including, among others, measures of patent quality and technological fit with each potential destination. Exploiting the differential impact of changes in the top tax rate on inventors of different qualities, we find that superstar top 1% inventors are significantly affected by top tax rates when deciding where to locate. The elasticity to the net-of-tax rate of the number of domestic superstar inventors is relatively small, around 0.03, while the elasticity of the number of foreign superstar inventors is around 1. Inventors who work in multinational companies are more likely to take advantage of tax differentials. On the other hand, if the company of an inventor has a higher share of its research activity in a given country, the inventor is less sensitive to the tax rate in that country.

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File URL: http://www.nber.org/papers/w21024.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 21024.

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Date of creation: Mar 2015
Publication status: published as Ufuk Akcigit & Salomé Baslandze & Stefanie Stantcheva, 2016. "Taxation and the International Mobility of Inventors," American Economic Review, American Economic Association, vol. 106(10), pages 2930-2981, October.
Handle: RePEc:nbr:nberwo:21024
Note: LS PE PR
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  1. Ernest MIGUELEZ, 2014. "Inventor diasporas and the internationalization of technology," Cahiers du GREThA 2014-12, Groupe de Recherche en Economie Théorique et Appliquée.
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  14. Jon Bakija & Joel Slemrod, 2004. "Do the Rich Flee from High State Taxes? Evidence from Federal Estate Tax Returns," Department of Economics Working Papers 2004-12, Department of Economics, Williams College.
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