American Economic Journal:
Applied Economics
ISSN 1945-7782 (Print) | ISSN 1945-7790 (Online)
Tax Incentives for Migrants with Mid-level Earnings: Evidence from the Netherlands
American Economic Journal: Applied Economics
(pp. 42–79)
Abstract
We examine how income taxes affect international mobility and wages. We study a Dutch preferential tax scheme for migrants, which introduced an income threshold for eligibility in 2012. The threshold is low relative to similar schemes in other countries, thereby offering eligibility to migrants with mid-level earnings. We find migration more than doubles closely above the income threshold, while migration below the threshold remains unchanged. These effects appear to be driven by additional migration, while wage bargaining responses are limited. We estimate a migration elasticity ranging from 1.6 to 2.7, somewhat higher than most studies on high-income migrants have found.Citation
Timm, Lisa Marie, Massimo Giuliodori, and Paul Muller. 2025. "Tax Incentives for Migrants with Mid-level Earnings: Evidence from the Netherlands." American Economic Journal: Applied Economics 17 (3): 42–79. DOI: 10.1257/app.20230438Additional Materials
JEL Classification
- H24 Personal Income and Other Nonbusiness Taxes and Subsidies; includes inheritance and gift taxes
- H31 Fiscal Policies and Behavior of Economic Agents: Household
- J15 Economics of Minorities, Races, Indigenous Peoples, and Immigrants; Non-labor Discrimination
- J31 Wage Level and Structure; Wage Differentials
- J82 Labor Standards: Labor Force Composition