Working Paper: CEPR ID: DP13694
Authors: Giacomo Corneo; Guido Neidhfer
Abstract: We analyze the effects of governmental redistribution of income on migration patterns using an Italian administrative dataset that includes almost every Italian citizen living abroad. Since Italy takes a middle ground in terms of redistribution, both the welfare-magnet effect from more redistributive countries and the propensity of the high-skilled to settle in countries with lower taxes can be empirically studied. Our findings confirm the hypothesis that destination countries with more redistribution receive a negative selection of Italian migrants. Policy simulations are run in order to gauge the magnitude of those migration effects. Based on estimated elasticities, we find that sizable increases in the amount of redistribution in Italy have small effects on the skill composition of the resident population.
Keywords: Roy model; redistribution; self-selection; migration
JEL Codes: D31; H23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| increased governmental income redistribution in destination countries (H87) | negative selection of Italian migrants regarding their skills (J61) |
| higher levels of redistribution (H23) | attract migrants with lower skill levels (J69) |
| skill distribution of Italian migrants in low-redistribution countries (J69) | stochastically dominates skill distribution in high-redistribution countries (D39) |
| substantial increases in redistribution in Italy (D39) | alter migration flows (F22) |
| effects of redistribution on migration flows (H23) | statistically significant but limited in practical significance for policy evaluation (C93) |