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Title: Fiscal Policy, Returns to Skill, and Canada-U.S. Migration: Evidence from the Late-1990s
Citation Type: Miscellaneous
Publication Year: 2012
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Abstract: In this study we develop, estimate, and simulate a nested logit model of migration among 59 Canadian and U.S. sub-national areas using over 70,000 microdata observations on workers across all deciles of the skill distribution obtained from the U.S. and Canadian censuses of 2000/2001. Combining microdata on individual workers with area data, weare able to consider the effects of tax policy differences across countries on worker migration. Our ability to identify highly skilled individuals using these data enables us to simulate the effects of changes to taxes (under balanced budget conditions) on the migration propensities of individuals as well as the magnitude of the aggregate migration streams. Simulations suggest that increasing Canadian after-tax returns to skill and implementing fiscal equalization (reducing the average Canadian tax rate to the average U.S. level with offsetting expenditure reductions to maintain budget neutrality) wouldeffectively reduce southward migration and especially so amongst highly skilled workers. The required reductions in tax rates and public expenditures are relatively large however and therefore would be expected to raise other substantial public policy concerns.
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Authors: Hunt, Gary L.; Mueller, Richard E.
Publisher: University of Maine
Data Collections: IPUMS USA
Topics: Migration and Immigration, Other
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