Migration Incentives and Taxation: Do Marginal Taxes Matter?

Univ. of Aarhus Economics Working Paper No. 2004-07

12 Pages Posted: 18 Jun 2008

See all articles by Bo Sandemann Rasmussen

Bo Sandemann Rasmussen

Aarhus University - Department of Economics and Business Economics

Multiple version iconThere are 2 versions of this paper

Date Written: September 21, 2004

Abstract

Faced with ageing populations many European countries may be tempted to attract immigrants. One way to do this is to offer tax incentives. Since the decision to migrate is a discrete choice it should be average taxes that are important for the migration decision. If, however, the supply of working hours is endogenous it is shown that marginal taxes are also important for the migration decision, even after controlling for average taxes. Hence, countries interested in attracting immigrants can do so even without reducing average taxes by having less progressive tax systems than other countries.

Keywords: Migration, average taxes, marginal taxes, labor supply, population ageing

JEL Classification: F22, H24

Suggested Citation

Rasmussen, Bo Sandemann, Migration Incentives and Taxation: Do Marginal Taxes Matter? (September 21, 2004). Univ. of Aarhus Economics Working Paper No. 2004-07, Available at SSRN: https://ssrn.com/abstract=1147570 or http://dx.doi.org/10.2139/ssrn.1147570

Bo Sandemann Rasmussen (Contact Author)

Aarhus University - Department of Economics and Business Economics ( email )

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