Global Migration of Talent and Tax Incentives: Evidence from Malaysia's Returning Expert Program

54 Pages Posted: 11 Nov 2016 Last revised: 30 Apr 2018

See all articles by Ximena V. Del Carpio

Ximena V. Del Carpio

World Bank - Independent Evaluation Group

Caglar Ozden

World Bank

Mauro Testaverde

World Bank

Mathis C. Wagner

Boston College

Ximena Vanessa Del Carpio

affiliation not provided to SSRN

Date Written: November 1, 2016

Abstract

This paper presents the first evidence on the efficacy of a major program designed to encourage the return migration of high-skilled individuals. The Malaysian Returning Expert Program targets high-skilled Malaysians abroad and provides them with tax incentives to return. At several eligibility thresholds, the probability of acceptance into the program increases discontinuously. Using administrative data on applicants, the analysis is able to identify the impact of acceptance to the Returning Expert Program on the probability of returning to Malaysia. The fuzzy regression discontinuity design estimates suggest that program approval increases the return probability by 40 percent for applicants with a preexisting job offer in Malaysia. There is no significant treatment effect for those who apply without a job offer. The estimated migration elasticity with respect to the net-of-tax rate, averaged across all applicants, is 1.2. Fiscal cost-benefit analysis of the Returning Expert Program finds a modest net fiscal effect of the program, between minus $6,900 and plus $4,200 per applicant, suggesting that the program roughly pays for itself.

Keywords: Tax Policy, International Trade and Trade Rules, Educational Sciences, Taxation & Subsidies, Tax Administration, Public Sector Economics, Public Finance Decentralization and Poverty Reduction, Economic Adjustment and Lending, Macro-Fiscal Policy, Tax Law, Migration and Development, International Migration, Human Migrations & Resettlements

Suggested Citation

Del Carpio, Ximena V. and Ozden, Caglar and Testaverde, Mauro and Wagner, Mathis Christoph and Del Carpio, Ximena Vanessa, Global Migration of Talent and Tax Incentives: Evidence from Malaysia's Returning Expert Program (November 1, 2016). World Bank Policy Research Working Paper No. 7875. Available at SSRN: https://ssrn.com/abstract=2867656

Ximena V. Del Carpio (Contact Author)

World Bank - Independent Evaluation Group ( email )

Washington, DC 20433
United States

Caglar Ozden

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Mauro Testaverde

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

Mathis Christoph Wagner

Boston College ( email )

140 Commonwealth Avenue
Chestnut Hill, MA 02467
United States

Ximena Vanessa Del Carpio

affiliation not provided to SSRN

No Address Available

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