Migration and tax policy: Evidence from Finnish full population data

Salla Kalin, Ilpo Kauppinen, Kaisa Kotakorpi and Jukka Pirttilä

No 150, Working Papers from VATT Institute for Economic 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 fll 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 fnd 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 frst 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 suÿcient 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; Social security; taxation and inequality; Labour markets and education; J61; H31; fi=Verotus|sv=Beskattning|en=Taxation| (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-int, nep-lab, nep-mig and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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https://www.doria.fi/handle/10024/186054

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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