Taxation and Internal Migration: Evidence from the Swiss Census Using Community-Level Variation in Income Tax Rates

39 Pages Posted: 27 Oct 2006

See all articles by Thomas Liebig

Thomas Liebig

Organization for Economic Co-Operation and Development (OECD)

Patrick A. Puhani

Leibniz Universität Hannover; University of St. Gallen - Swiss Institute for International Economics and Applied Economic Research; IZA Institute of Labor Economics; Université Paris II - Panthéon-Assas

Alfonso Sousa-Poza

University of Hohenheim - Institute of Household and Consumer Economics; IZA Institute of Labor Economics

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Date Written: October 2006

Abstract

We investigate the relationship between income tax rate variation and internal migration for the unique case of Switzerland, whose system of determining tax rates primarily at the community level results in enough variation to permit analysis of their influence on migration. Specifically, using Swiss census data, we analyze migratory responses to tax rate variations for various groups defined by age, education, and nationality/residence permit. The results suggest that young Swiss college graduates are most sensitive to tax rate differences, but the estimated effects are not large enough to offset the revenue-increasing effect of a rise in tax rate. The migratory responses of foreigners and other age-education groups are even smaller, and reverse causation seems negligible.

Keywords: mobility, immigration, foreigners, visa status, residence permit, taxation, Switzerland

JEL Classification: J61, H73

Suggested Citation

Liebig, Thomas and Puhani, Patrick A. and Sousa-Poza, Alfonso, Taxation and Internal Migration: Evidence from the Swiss Census Using Community-Level Variation in Income Tax Rates (October 2006). IZA Discussion Paper No. 2374, Available at SSRN: https://ssrn.com/abstract=940611

Thomas Liebig (Contact Author)

Organization for Economic Co-Operation and Development (OECD) ( email )

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Patrick A. Puhani

Leibniz Universität Hannover ( email )

Institut für Arbeitsökonomik
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Alfonso Sousa-Poza

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