Taxation and the International Mobility of Inventors

42 Pages Posted: 13 Mar 2015

See all articles by Ufuk Akcigit

Ufuk Akcigit

University of Chicago - Department of Economics; National Bureau of Economic Research (NBER); Center for Economic and Policy Research (CEPR)

Salomé Baslandze

Federal Reserve Bank of Atlanta

Stefanie Stantcheva

Harvard University - Department of Economics

Multiple version iconThere are 3 versions of this paper

Date Written: February 16, 2015

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.

Keywords: axation, Migration, International Mobility, Superstars, Innovation

JEL Classification: F22, H24, H31, J44, J61, O31, O32, O33

Suggested Citation

Akcigit, Ufuk and Baslandze, Salome and Stantcheva, Stefanie, Taxation and the International Mobility of Inventors (February 16, 2015). PIER Working Paper No. 15-014, Available at SSRN: https://ssrn.com/abstract=2576805 or http://dx.doi.org/10.2139/ssrn.2576805

Ufuk Akcigit (Contact Author)

University of Chicago - Department of Economics ( email )

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HOME PAGE: http://www.ufukakcigit.com

National Bureau of Economic Research (NBER) ( email )

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Center for Economic and Policy Research (CEPR) ( email )

London
United Kingdom

Salome Baslandze

Federal Reserve Bank of Atlanta ( email )

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Atlanta, GA 30309-4470
United States
30309 (Fax)

HOME PAGE: http://https://sites.google.com/site/sabaslandze/home

Stefanie Stantcheva

Harvard University - Department of Economics ( email )

Littauer Center
Cambridge, MA 02138
United States

HOME PAGE: http://scholar.harvard.edu/stantcheva/home

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