Can Tax Incentives Bring Brains Back? High Skill Migration and the Effects of Returnees’ Tax Schemes

Speaker: Giuseppe Ippedico, PhD Candidate, Economics, UC Davis

Biography:

Giuseppe Ippedico is a Ph.D. Candidate in the Department of Economics at the University of California, Davis. Giuseppe’s research is at the intersection between migration and public economics, and broadly focuses on the effects of migration on local economies. He holds a master’s degree in Economics and a bachelor’s degree in Economics and Social Sciences from Bocconi University, Milan, Italy.  

Abstract:

Brain drain is an increasingly relevant concern for many countries experiencing large emigration rates of young and skilled individuals. In response, governments have designed fiscal incentives to attract high skill expatriates and foreign nationals. Yet, we still lack empirical evidence on the effectiveness of tax incentives in attracting marginal high skilled migrants. In this paper we focus on the Italian 2010 tax scheme, which granted a substantial tax discount to college-graduate expatriates younger than 41 years old who relocate to Italy, providing a suitable quasi-experimental setting to study the effect of tax incentives. Using a Difference-in-Difference strategy and administrative data on return migration, we show that eligible individuals are 50% more likely to return after the reform. Additionally, using German social security data, we find evidence that Italian expats in Germany increase their length of stay, suggesting that they adapt their migration behavior to fulfill eligibility criteria for the tax scheme.