Taxation and Migration: Evidence and Policy Implications

40 Pages Posted: 15 Apr 2019

See all articles by Henrik Kleven

Henrik Kleven

Princeton University - Woodrow Wilson School of Public and International Affairs

Camille Landais

London School of Economics & Political Science (LSE)

Mathilde Munoz

Paris School of Economics (PSE)

Stefanie Stantcheva

Harvard University - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: April 2019

Abstract

In this article, we review a growing empirical literature on the effects of personal taxation on the geographic mobility of people and discuss its policy implications. We start by laying out the empirical challenges that prevented progress in this area until recently, and then discuss how recent work have made use of new data sources and quasi-experimental approaches to credibly estimate migration responses. This body of work has shown that certain segments of the labor market, especially high-income workers and professions with little location-specific human capital, may be quite responsive to taxes in their location decisions. When considering the implications for tax policy design, we distinguish between uncoordinated and coordinated tax policy. We highlight the importance of recognizing that mobility elasticities are not exogenous, structural parameters. They can vary greatly depending on the population being analyzed, the size of the tax jurisdiction, the extent of tax policy coordination, and a range of non-tax policies. While migration responses add to the efficiency costs of redistributing income, we caution against over-using the recent evidence of (sizeable) mobility responses to taxes as an argument for less redistribution in a globalized world.

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Suggested Citation

Kleven, Henrik and Landais, Camille and Munoz, Mathilde and Stantcheva, Stefanie, Taxation and Migration: Evidence and Policy Implications (April 2019). NBER Working Paper No. w25740. Available at SSRN: https://ssrn.com/abstract=3372036

Henrik Kleven (Contact Author)

Princeton University - Woodrow Wilson School of Public and International Affairs ( email )

Princeton University
Princeton, NJ 08544-1021
United States

Camille Landais

London School of Economics & Political Science (LSE) ( email )

Mathilde Munoz

Paris School of Economics (PSE) ( email )

48 Boulevard Jourdan
Paris, 75014 75014
France

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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