Template-Type: ReDIF-Paper 1.0
Series: Tinbergen Institute Discussion Papers
Creation-Date: 2022-09-27
Number: 22-068/V
Author-Name: Lisa Marie Timm
Author-Workplace-Name: University of Amsterdam
Author-Name: Massimo Giuliodori
Author-Workplace-Name: University of Amsterdam
Author-Name: Paul Muller
Author-Workplace-Name: Vrije Universiteit Amsterdam
Title: Tax incentives for high skilled migrants: evidence from a preferential tax scheme in the Netherlands
Abstract: This paper examines to what extent an income tax exemption affects international
mobility and wages of skilled immigrants. We study a preferential tax scheme for
foreigners in the Netherlands, which introduced an income threshold for eligibility in
2012 and covers a large share of the migrant income distribution. By using detailed
administrative data ina difference-in-differences setup, we find that the number of
migrants in the income range closely above the threshold more than doubles, whereas
there is little empirical support for a decrease of migration below the threshold. Our
results indicate that these effects are driven mainly by additional migration, while
wage bargaining responses are fairly limited. We conclude that the preferential tax
scheme is highly effective in attracting more skilled migrants
Classification-JEL: F22, J61, H24, H31

Keywords: international migration, income tax benefits, wage bargaining, bunching.
File-URL: https://papers.tinbergen.nl/22068.pdf
File-Format: application/pdf
File-Size: 4.277.804 bytes
Handle: RePEc:tin:wpaper:20220068