Essays on Determinants of Tax and Services Induced Mobility

Tax and service induced mobility of economic agents is one of the most important factors in shaping regional and economic performances. Indeed, since the fundamental contribution of Tiebout (1956), it is acknowledged that individuals move among regions and countries to satisfy their preferences with respect to the bundle of tax and services that each jurisdiction is providing. With this respect, the mobility of high-skilled individuals is a fundamental public policy issue. In fact, these agents play a fundamental role in fostering the local development given their high productivity and their ability to generate positive spillovers within jurisdictions' territories. Therefore, governments are incentivized to shape their policies to attract this kind of individuals and may compete with each other to reach this target. In this context, tax and services induced mobility of high-skilled individuals become a fundamental driving force that influences national and regional policies and economic performances. Therefore, understanding the determinants of economic mobility is paramount. This doctoral thesis is devoted to investigating empirically the determinants of tax and service mobility by means of the discrete choice approach. Chapter one provides an introductory overview of the tax and service induced phenomenon. The chapter starts by summarizing the theoretical literature regarding tax and service induced migration and the debate regarding this phenomenon. The second part of the chapter is devoted to a general discussion of the discrete choice approach in the context of individual economic mobility. Chapter two analyzes the tax induced mobility of high-skilled workers from an empirical point of view. More specifically, the chapter investigates the effect of top marginal tax rates on turnover and migration patterns of football players in 16 European countries between 2007 and 2016. The analysis is carried by estimating a two-sided matching model using a maximum score matching approach. This strategy has permitted to estimate the structural parameters of the underlying decision process of footballers by accounting for the competition between agents in the market and get rid of factors affecting both the demand and supply side for which information is hardly accessible. These parameters are then exploited to quantify the sensitivity of the population of tax payers to taxation and the heterogeneity of these effects on the base of players' abilities and nationalities. Findings indicate a heterogeneous effect of marginal taxation. Chapter three analyzes the service-induced mobility of university students by focusing on the effect of financial and in-kind aid policies on their choices of location. This phenomenon is analyzed by using a unique dataset with administrative data on Italian university students enrolled for the first time in the academic year 2014-2015, along with detailed information on the financial and in-kind policies of the Diritto allo studio universitario program. The analysis is by considering explicitly the heterogeneity in students' preferences. Firstly, a Conditional Logit model is estimated to identify the systematic variation in students' preferences by interacting individual characteristics with alternatives' attributes. Secondly, a the Latent Class Logit model in order to consider explicitly the heterogeneity in students' preferences. The latter approach allows to model systematic and random heterogeneity in preferences by exploiting the individual characteristics of students. The sensitivity of students' location decisions is quantified by computing willingness to pay and semi-elasticity measures. Findings indicate that policies that provide scholarships together with places in dormitories are effective in attracting more students.