Jori Pinje, University of Copenhagen:

"Tax- and Wage-Induced Migration of Skilled Labor: A Micro-Data Study of the European Labor Market for Professional Footballers"


The literature on tax competition/arbitrage explores the extent to which tax-induced mobility of assets and activities, in the context of open borders, undermines national tax bases. Whereas such consequences are relatively well established for capital and corporate income, the evidence is scarce and mixed with respect to individual earnings (Genschel and Schwarz, 2011).

Due to the scarcity of cross-country skilled labor micro-data, this paper takes an unorthodox approach and investigates individual mobility using as a laboratory a large panel of professional football players in 30 countries on the European continent in the period 1999-2010.

I estimate a polychotomous choice model, focusing on mobility induced by, on one side, individual and country level variation in earnings and income tax treatment and, on the other side, disincentives due to geographical distance, cross-border mobility restrictions. Identification of tax-induced mobility is generated by extensive variation in preferential tax schemes and general tax reforms and the effect of cross-border mobility restrictions by the complex and time-varying transitional restrictions imposed between old and new EU countries following the enlargements of 2004 and 2007.