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Taxation and the International Mobility of Inventors

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Listed:
  • Ufuk Akcigit

    () (Department of Economics, University of Pennsylvania and NBER)

  • Salomé Baslandze

    () (Department of Economics, University of Pennsylvania)

  • Stefanie Stantcheva

    () (Department of Economics, Harvard University)

Abstract

This paper studies the effect of top tax rates on inventors' mobility since 1977. We put special emphasis on”superstar" inventors, those with the most 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. We find that superstar top 1% inventors are significantly affected by top tax rates when deciding where to locate. The elasticity of the number of domestic inventors to the net-of-tax rate is relatively small, between 0.04 and 0.06, while the elasticity of the number of foreign inventors is much larger, around 1.3. The elasticities to top net-of-tax rates decline as one moves down the quality distribution of inventors. 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.

Suggested Citation

  • Ufuk Akcigit & Salomé Baslandze & Stefanie Stantcheva, 2015. "Taxation and the International Mobility of Inventors," PIER Working Paper Archive 15-014, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
  • Handle: RePEc:pen:papers:15-014
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    References listed on IDEAS

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    Cited by:

    1. 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.
    2. Julio López Laborda & Fernando Rodrigo Sauco, 2017. "Movilidad de los contribuyentes de rentas altas en respuesta a las diferencias regionales en los impuestos personales," Studies on the Spanish Economy eee2017-28, FEDEA.
    3. Krieger, Tim & Renner, Laura & Ruhose, Jens, 2018. "Long-term relatedness between countries and international migrant selection," Journal of International Economics, Elsevier, vol. 113(C), pages 35-54.
    4. Matthias Parey & Jens Ruhose & Fabian Waldinger & Nicolai Netz, 2017. "The Selection of High-Skilled Emigrants," The Review of Economics and Statistics, MIT Press, vol. 99(5), pages 776-792, December.
    5. Aghion, Philippe & Akcigit, Ufuk & Bergeaud, Antonin & Blundell, Richard William & Hémous, David, 2015. "Innovation and Top Income Inequality," CEPR Discussion Papers 10659, C.E.P.R. Discussion Papers.
    6. Dechezlepretre, Antoine & Einiö, Elias & Martin, Ralf & Nguyen, Kieu-Trang & Reenen, John Van, 2016. "Do tax incentives for research increase firm innovation? An RD design for R&D," LSE Research Online Documents on Economics 66428, London School of Economics and Political Science, LSE Library.
    7. Enrico Moretti & Daniel J. Wilson, 2017. "The Effect of State Taxes on the Geographical Location of Top Earners: Evidence from Star Scientists," American Economic Review, American Economic Association, vol. 107(7), pages 1858-1903, July.
    8. Bastani, Spencer & Waldenström, Daniel, 2018. "How Should Capital Be Taxed? Theory and Evidence from Sweden," IZA Discussion Papers 11475, Institute for the Study of Labor (IZA).
    9. Ugo Troiano, 2017. "Intergovernmental Cooperation and Tax Enforcement," NBER Working Papers 24153, National Bureau of Economic Research, Inc.
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    11. Alex Bell & Raj Chetty & Xavier Jaravel & Neviana Petkova & John Van Reenen, 2017. "Who Becomes an Inventor in America? The Importance of Exposure to Innovation," CEP Discussion Papers dp1519, Centre for Economic Performance, LSE.
    12. Philippe Aghion & Ufuk Akcigit & Ari Hyytinen & Otto Toivanen, 2017. "The Social Origins of Inventors," CEP Discussion Papers dp1522, Centre for Economic Performance, LSE.
    13. Diego d'Andria, 2016. "Employed inventors, inter-firm mobility, bonus pay with multi-stage R&D processes, and optimal innovation policy," JRC Working Papers on Taxation & Structural Reforms 2016-02, Joint Research Centre (Seville site).
    14. d’Andria, Diego, 2016. "Why are researchers paid bonuses? On technology spillovers and market rivalry," Research Policy, Elsevier, vol. 45(10), pages 2105-2112.
    15. Diego d’Andria & Dimitrios Pontikakis & Agnieszka Skonieczna, 2018. "Towards a European R&D incentive? An assessment of R&D provisions under a common corporate tax base," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 27(5-6), pages 531-550, August.
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    17. David R. Agrawal & Dirk Foremny, 2018. "Relocation of the Rich: Migration in Response to Top Tax Rate Changes from Spanish Reforms," CESifo Working Paper Series 7027, CESifo Group Munich.
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    19. repec:wfo:wstudy:58545 is not listed on IDEAS
    20. Ross Levine & Chen Lin & Zigan Wang, 2018. "Toxic Emissions and Executive Migration," NBER Working Papers 24389, National Bureau of Economic Research, Inc.
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    23. repec:oup:jecgeo:v:17:y:2017:i:5:p:1009-1038. is not listed on IDEAS
    24. Katrine Jakobsen & Kristian Jakobsen & Henrik Kleven & Gabriel Zucman, 2018. "Wealth Taxation and Wealth Accumulation: Theory and Evidence from Denmark," NBER Working Papers 24371, National Bureau of Economic Research, Inc.
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    More about this item

    Keywords

    Taxation; Migration; International Mobility; Superstars; Innovation; Patents; Invention Patents; Invention.;

    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
    • J44 - Labor and Demographic Economics - - Particular Labor Markets - - - Professional Labor Markets and Occupations
    • J61 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - Geographic Labor Mobility; Immigrant Workers
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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