The Effects of Taxation on Migration: Some Evidence for the ASEAN and APEC Economies

Melbourne Institute Working Paper No. 19/10

Date: December 2010


Edda Claus
Iris Claus
Michael Dörsam


This paper investigates the effects of taxation on migration. It develops a stylized, twocountry model to examine the impact of taxation on labor mobility. The theoretical prediction that taxation affects migration decisions is supported by some empirical evidence for the ASEAN and APEC economies. Average tax rates are found to have a larger impact on migration choices than marginal rates. Moreover, the results suggest that educated migrants are more responsive to taxation than migrants with no education. Average tax rates are most important for migrants with secondary education, while marginal rates have a greater influence on the decisions of migrants with tertiary education than secondary educated migrants. The finding that taxation affects migration decisions, in particular of educated migrants, has important policy implications.

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