Frank Cörvers

We study a policy change in the Netherlands that unexpectedly reduced the duration of preferential tax treatment for high-skilled migrants from specific countries. Using administrative data, we document substantial out-migration responses driven entirely by the top 1% of earners, with no detectable response below the 95th percentile. Among the 95-99th percentile, previously internationally mobile workers also leave sooner, particularly to countries offering tax breaks, consistent with tax shopping behavior and pointing to distortionary effects of international tax competition. Increased tax intake from remaining workers offsets revenue lost from departing high earners, making the policy fiscally cost-neutral.

Using unique administrative data on historical dialects, we estimate the effect of cultural dissimilarity on cross-border commuting flows from the Dutch-speaking regions of Belgium (i.e. Flanders and Brussels) to the Netherlands. The results show that economic drivers, specifically the cost of commuting measured by the geographical distance, remain the most important factor defining the distribution of workers across the national borders of Belgium and the Netherlands. Furthermore, we showed that an increase in cultural difference between municipalities by one standard deviation leads to a robust decrease in cross-border commuting flows from Belgium to the Netherlands ranging from 7% to 22%.