Abstract
This chapter investigates the effects of migration taxes on migration patterns and revenue generation at the source, with reference to the intra-ASEAN migration of workers. We show that when cross-border labor markets are fraught with incomplete information between potential employers and employees about the true quality of workers, migration patterns can be unconventional. Signaling about true productivity by prospective migrants can alter such patterns. Moreover, if migrants face additional costs, such as an exit tax, at the time of emigration from the source country it can also affect migration patterns. Since an information gap about true skill types and statistical discrimination in the labor market of destination countries often dissuades top skill types from migrating, a lower migration tax for high-skill workers could maximize revenue at the source.
Highlights
Analyzing cross-border labor migration has been one of the most complex yet interesting subjects for research in labor economics, international economics, and public economics, among others
We argue that despite asymmetric information and the initial disadvantage faced by skilled workers, the wage premium generally has been sufficient to create brain drain from developing countries
The results provide consequences for income distribution in the source country
Summary
Analyzing cross-border labor migration has been one of the most complex yet interesting subjects for research in labor economics, international economics, and public economics, among others. The reference to exit taxes is by no means a policy designed to curb emigration from source countries Instead, they can be used to improve the stock of human capital in source countries—with established welfare implications (Stark and Wang, 2002)—and could eventually promote more skilled than unskilled emigration from developing countries. To understand the scope of this policy, this chapter surveys studies covering the established relationship between trade, public policies, and labor mobility. Those focused more on the observed complementarity between trade and migration are discussed.
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