The Microeconometrics Seminar: Every Tuesday
Time: 12:30 pm – 1:30 pm
Date: 23rd of February 2021
by visio
Mathilde MUNOZ (PSE) – “Firm-Led Mobility: Equity-Efficiency Effects of a Novel Mobility Channel”

Abstract: This paper investigates a novel mobility channel where the mobility of workers is initiated by firms rather than individuals’ decisions, and that currently represents 2/3 of overall geographical mobility within Europe. I exploit the unique setting provided by a Europe- wide scheme that fully liberalizes international mobility through services suppliers and exempts workers “posted” abroad by firms from tax and social contributions in their destination country. I assemble novel and exhaustive administrative data on this continent-wide firm-led mobility scheme to study its effects on labour market and fiscal outcomes. Drawing on rich exogenous policy variations, I find that both liberalizing and incentivizing the mobility of workers through firms generate large aggregate mobility gains that outweigh the mobility effects triggered by standard individual-based migration policies. I further provide evidence that firms alleviate part of the frictions that constraint individuals’ migration decisions, especially for workers with lower level of initial education, thus rationalizing the magnitude of these gains. To understand the incidence of incentivizing the mobility of workers through firms, I study how the surplus from increased mobility through firms has been shared within and between countries. I find that firm-led mobility generates large employment, wages and profits gains in sending firms, as well as direct monetary benefits in origin countries, through a fiscal externality channel that is absent in standard migration schemes. Firm-led mobility also triggers displacement of domestic workers in receiving labour markets. Overall, I establish that liberalizing this novel mobility channel generates an important efficiency surplus, and redistributes from destination to origin (poorer) governments, in contrast with standard migration policies. However, part of the large surplus from increased integration through companies is accrued to sending firms rather than workers, and generates important origin-level tax competition incentives.

 
Organizers:

Benoît SCHMUTZ (Laboratoire de Microéconométrie-CREST)
Anthony STRITTMATTER (Laboratoire de Microéconométrie-CREST)
Sponsors:
CREST