Working Paper: CEPR ID: DP18414
Authors: Joo Brogueira de Sousa; Pedro Teles
Abstract: We study preferential tax schemes for high-skill immigrants such as those adopted in Europe in the past two decades. The overall assessment is negative. While they induce a very large immigration surplus tilted towards the low-skill, they may also give rise to an emigration deficit that more than offsets the surplus. The unilateral adoption is ambiguous in its welfare effects for both high- and low- skill workers, but the multilateral adoption is unambiguous in redistributing from low-skill to high-skill workers.
Keywords: immigration; emigration; preferential tax schemes; labor mobility; distribution
JEL Codes: H21; F22
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| preferential tax schemes for high-skill immigrants (J68) | immigration surplus (J69) |
| preferential tax schemes for high-skill immigrants (J68) | emigration deficit (F22) |
| unilateral adoption of tax schemes (H26) | harm to low and high-skill workers (F66) |
| unilateral adoption of tax schemes (H26) | lower wages for native workers (F66) |
| unilateral adoption of tax schemes (H26) | increase in taxes for native workers (H29) |
| multilateral adoption of tax schemes (F38) | redistribution of benefits towards high-skill workers (J68) |
| immigration surplus (without considering emigration) (F22) | significant (C20) |
| emigration factored in (F22) | diminishing immigration surplus (J69) |