Relocation of the rich: Migration in response to top tax rate changes from Spanish reforms

David R. Agrawal, Dirk Foremny

Research output: Contribution to journalArticlepeer-review

18 Scopus citations


A Spanish reform granted regions the authority to set income tax rates, resulting in substantial tax differentials. Using administrative data, we find that conditional on moving, taxes have a significant effect on location choice. A 1% increase in the net-of-tax rate for a region relative to others increases the probability of moving to that region by 1.7 percentage points. We estimate an elasticity of the number of top taxpayers with respect to net-of-tax rates of 0.85. The mechanical increase in tax revenue due to higher tax rates is larger than the loss in tax revenue from the net outflow of migration.

Original languageEnglish
Pages (from-to)214-232
Number of pages19
JournalReview of Economics and Statistics
Issue number2
StatePublished - May 1 2019

Bibliographical note

Funding Information:
This project began while D.A. was a guest researcher at Universitat de Barcelona in 2014, and he thanks Universitat de Barcelona and the people associated with it. We thank the editor, Rohini Pande, and three referees for improving the paper. The paper benefited from comments by José Maria Durán, Dennis Epple, Alejandro Esteller-Moré, Gabrielle Fack, Aart Gerritsen, Steven Haider, James Hines, William Hoyt, Jordi Jofre-Montseny, Camille Landais, Andrea Lassmann, Alessia Matano, Thomas Piketty, Kurt Schmidheiny, Nathan Seegert, Danny Shoag, Joel Slem-rod, Albert Solé-Ollé, Michel Strawczynski, Juan Carlos Suárez Serrato, Johannes Voget, Daniel Waldenström, David Wildasin, and Daniel Wilson, as well as seminar participants at Case Western Reserve University, CESifo Venice Summer Institute, Centre for European Economic Research (ZEW), CESifo Conference on Public Sector Economics, ETH Zurich, International Institute of Public Finance, Michigan State University, National Tax Association, the Paris School of Economics, the Pontifícia Universidade Católica do Rio de Janeiro, Purdue University, the Universitat de Barcelona, the University of Kentucky, the University of Louisville, the University of Michigan, the MaTax Conference in Mannheim, the PET 2016 Conference in Rio de Janeiro, and Universität Siegen. We thank Jorge de la Roga and Diego Puga for sharing their MCVL code and Jordi Oritt Prat for research assistance. D.F. acknowledges financial support from the Fundación Ramón Areces and project ECO2015-68311-R (Ministerio de Economıa y Competitividad).

Publisher Copyright:
© 2019 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology.

ASJC Scopus subject areas

  • Social Sciences (miscellaneous)
  • Economics and Econometrics


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