Tax Incentives and Return Migration

Jacopo Bassetto and Giuseppe Ippedico

No 26097, RFBerlin Discussion Paper Series from ROCKWOOL Foundation Berlin (RFBerlin)

Abstract: We study how tax incentives affect the return migration of high-skilled expatriates to their home country, exploiting a generous income tax break for returnees in Italy. Using administrative data and a Triple-Difference design, we estimate a migration elasticity to the average net-of-tax rate just below one. Responses are sizable across the upper half of the earnings distribution, indicating that tax-induced migration is not limited to top earners. A cost-benefit analysis reveals that, while costly in the short term, the scheme pays for itself in present value if a sufficiently large fraction of returnees remains after the scheme elapses.

Keywords: brain drain; tax incentives; return migration (search for similar items in EconPapers)
JEL-codes: F22 H24 H31 J61 (search for similar items in EconPapers)
Date: 2026-04
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Persistent link: https://EconPapers.repec.org/RePEc:crm:wpaper:26097

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