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Taxation, Ethnic Ties and the Location Choice of Highly Skilled Immigrants

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  • Thomas Liebig
  • Alfonso Sousa-Poza

Abstract

With the emerging international competition to attract highly skilled migrants, the determinants of their choice of residential location are increasing in importance. Besides expected wages and job opportunities, the costs of migration and the subjective evaluation of a location, two other factors help determine the expected net return from migration: taxes and network effects. Yet empirical research on the effects of these two factors and their interaction on highly skilled migration is lacking. The aim of this paper is to throw some empirical light on the role of these two factors via a case study of Switzerland. For several reasons, Switzerland is a particularly interesting case study for this task. Tax rates are primarily determined at the local level and thus enough variation exists to analyse their influence on migration. Furthermore, in contrast to other European countries, Switzerland has pursued a fairly liberal immigration policy and maintains a unique permit system that has become increasingly skills-focused: more than 35% of all persons with a university degree resident in Switzerland are immigrants. Analysis of the 2000 Swiss census data provides evidence for fiscally-induced migration within Switzerland, particularly with respect to a location choice of highly skilled immigrants. Avec l’émergence d’une compétition internationale pour attirer les migrants hautement qualifiés, les déterminants des choix de lieu de résidence de ces derniers gagnent en importance. En plus des perspectives de salaires et d’emploi, du coût de migration et des appréciations subjectives portées sur ces lieux, deux autres facteurs semblent jouer sur le rendement net attendu de la migration : les impôts et les effets de réseaux. Ceci étant, l’étude de l’impact de ces deux facteurs, ainsi que des effets de leurs interactions, manquent dans les analyses empiriques. Le but de ce papier est d’analyser le rôle de ces deux facteurs à travers l’étude du cas de la Suisse. Pour plusieurs raisons, la Suisse s’avère un pays particulièrement intéressant à étudier à cet égard. Les taux d’imposition sont principalement déterminés au niveau local; d’où l’existence de variations suffisantes pour analyser leur impact sur la migration. De plus, contrairement à d’autres pays européens, la Suisse a poursuivi une politique assez libérale en matière d’immigration et maintient un système unique de permis, qui est devenu de plus en plus ciblé sur les qualifications : plus de 35 % de toutes les personnes détenant un diplôme universitaire qui résident en Suisse sont des immigrés. L’analyse des données du recensement Suisse de 2000 met en évidence la migration intra-Suisse engendrée par des raisons fiscales, concernant plus particulièrement le choix des lieux de résidence des immigrés hautement qualifiés.

Suggested Citation

  • Thomas Liebig & Alfonso Sousa-Poza, 2005. "Taxation, Ethnic Ties and the Location Choice of Highly Skilled Immigrants," OECD Social, Employment and Migration Working Papers 24, OECD Publishing.
  • Handle: RePEc:oec:elsaab:24-en
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    File URL: http://dx.doi.org/10.1787/523567425558
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    Cited by:

    1. Burkert, Carola & Niebuhr, Annekatrin & Wapler, Rüdiger, 2007. "Regional disparities in employment of high-skilled foreigners: Determinants and options for migration policy in Germany," HWWI Research Papers 3-7, Hamburg Institute of International Economics (HWWI).
    2. Haupt, Alexander & Krieger, Tim & Lange, Thomas, 2013. "Education policy, student migration, and brain gain," Discussion Paper Series 2013-05, University of Freiburg, Wilfried Guth Endowed Chair for Constitutional Political Economy and Competition Policy.
    3. Hercog, Metka & Siegel, Melissa, 2011. "Promoting return and circular migration of the highly skilled," MERIT Working Papers 015, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    4. GABSZEWICZ, Jean J. & GVETADZE, Salome & ZANAJ, Skerdilajda, 2011. "Migrations, public goods and taxes," CORE Discussion Papers 2011047, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).

    More about this item

    JEL classification:

    • F22 - International Economics - - International Factor Movements and International Business - - - International Migration
    • 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

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