Microdata Access Grant 2020. Authors: Massimo Giuliodori (Universiteit van Amsterdam – Faculteit Economie en Bedrijfskunde); Paul Muller (Vrije Universiteit – School of Business and Economics).
Immigrants that relocate to the Netherlands with the purpose of starting employment that requires skills that are scarce in the Dutch labor force, benefit from a substantial reduction in income taxation. Such tax benefits have existed since the 50’s in the Netherlands, though the details have continuously changed. Currently, the rule implies that 30% of the employee’s wage is exempt from income tax for a period of at most 8 years. The Ministry of Finance has already agreed to provide us access to all individuals benefiting from the 30% ruling from the year 2009 onwards. CBS has confirmed that these individuals can be linked to other microdata. This project will evaluate the implications of the 30% tax rule on immigration and wage formation. More specifically, we aim to provide insights in how effective tax exemptions are in attracting immigrants, how they affect the duration of immigrants’ stay in the Netherlands and how they affect the wages earned by immigrants. Each of these questions is crucial in understanding how optimal policy should be shaped.