Tax Incentives and Return Migration

Jacopo Bassetto () and Giuseppe Ippedico ()
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Jacopo Bassetto: University of Bologna

No 17224, IZA Discussion Papers from Institute of Labor Economics (IZA)

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.

Keywords: brain drain; tax incentives; return migration; personal income tax (search for similar items in EconPapers)
JEL-codes: F22 H24 H31 J61 (search for similar items in EconPapers)
Pages: 72 pages
Date: 2024-08
New Economics Papers: this item is included in nep-int, nep-lab, nep-mig, nep-pbe, nep-pub and nep-ure
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