Migration and tax policy:Evidence from Finnish full population data

Salla Kalin (), Ilpo Kauppinen, Kaisa Kotakorpi () and Jukka Pirttilä
Additional contact information
Salla Kalin: University of Helsinki
Kaisa Kotakorpi: Tampere University

No 1, Working Papers from Finnish Centre of Excellence in Tax Systems Research

Abstract: While evidence on the impact of taxation on the international migration of certain special groups of workers has expanded, evidence on the links between taxes and migration of the general population is extremely limited. We aim to fill this gap by estimating the impact of taxation on the migration decisions of the entire working population in a high-tax source country, Finland. We find that the average domestic elasticity of migration with respect to the domestic tax rate is very small (around 0.001). This holds for various occupational and income groups of interest. We also provide a first empirical implementation of the theoretical results of Lehmann et al. (2014), who show that if a fully nonlinear income tax schedule at the top is used, the key sufficient statistic for the optimal tax is a semi-elasticity of migration. Our estimates indicate that the migration responses increase for top earners, but remain very small, at least up to the top per mille of income earners.

Keywords: taxation; emigration (search for similar items in EconPapers)
JEL-codes: H31 J61 (search for similar items in EconPapers)
Pages: 58 pages
Date: 2022-10
New Economics Papers: this item is included in nep-pbe
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Citations: View citations in EconPapers (1)

Published in FIT Working Paper Series, Finnish Center of Excellence in Tax Systems Research

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Related works:
Working Paper: Migration and Tax Policy: Evidence from Finnish Full-Population Data (2024)
Working Paper: Migration and tax policy: Evidence from Finnish full population data (2022)
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