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Tax incentives and return migration

Author

Listed:
  • Jacopo Bassetto
  • Giuseppe Ippedico

Abstract

Brain drain is a key policy concern for many countries. In this paper we study whether tax incentives are an effective policy to attract high-skilled expatriates back to their home country, exploiting a generous income tax break for Italian returnees. Using administrative data and a Triple Differences design, we find that eligible individuals are 27% more likely to return to Italy. Additionally, we uncover significant effects throughout the wage distribution, revealing that tax-induced migration is a broad phenomenon beyond top earners. A cost-benefit analysis shows that the tax scheme can pay for itself by targeting young high-skilled individuals.

Suggested Citation

  • Jacopo Bassetto & Giuseppe Ippedico, 2024. "Tax incentives and return migration," Discussion Papers 2024-05, University of Nottingham, GEP.
    • Handle: RePEc:not:notgep:2024-05
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    File URL: https://www.nottingham.ac.uk/gep/documents/papers/2024/24-05.pdf
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    Keywords

    tax incentives; return migration; wage distribution;
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