American Economic Review Vol. 107 No. 7 2017

The Effect of State Taxes on the Geographical Location of Top Earners: Evidence from Star Scientists

Enrico Moretti¹; Daniel J. Wilson²

¹ Department of Economics, University of California, Berkeley, 619 Evans Hall 3880, Berkeley, CA 94720 (email: ) · ² Federal Reserve Bank of San Francisco, 101 Market Street, Mail Stop 1130, San Francisco, CA 94105 (email: )

Abstract

We quantify how sensitive is migration by star scientists to changes in personal and business tax differentials across states. We uncover large, stable, and precisely estimated effects of personal and corporate taxes on star scientists' migration patterns. The long-run elasticity of mobility relative to taxes is 1.8 for personal income taxes, 1.9 for state corporate income tax, and −1.7 for the investment tax credit. While there are many other factors that drive when innovative individuals and innovative companies decide to locate, there are enough firms and workers on the margin that state taxes matter.

DOI

10.1257/aer.20150508

Volume

107

Issue

7

Pages

1858-1903

Language

en

Sources

bibtex:phds-export.bib openalex crossref

Cite

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