Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/265803 
Year of Publication: 
2022
Series/Report no.: 
IZA Discussion Papers No. 15582
Publisher: 
Institute of Labor Economics (IZA), Bonn
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 in a 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.
Subjects: 
international migration
income tax benefits
wage bargaining
bunching
JEL: 
F22
J61
H24
H31
Document Type: 
Working Paper

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