Taxation and International Migration of Superstars: Evidence from the European Football Market

Abstract

This paper analyzes the effects of top earnings tax rates on the international migration of top football players in Europe. We construct a panel data set of top earnings tax rates, football player careers, and club performances in the first leagues of 14 European countries since 1985. We identify the effects of top earnings tax rates on migration using a number of tax and institutional changes: (a) the 1995 Bosman ruling which liberalized the European football market, (b) top tax rate reforms within countries, and (c) special tax schemes offering preferential tax rates to immigrant football players. We start by presenting reduced-form graphical evidence showing large and compelling migration responses to country-specific tax reforms and labor market regulation. We then set out a theoretical model of taxation and migration, which is tested using all sources of tax variation simultaneously. Our results show that (i) the overall location elasticity with respect to the net-of-tax rate is positive and large, (ii) location elasticities are extremely large at the top of the ability distribution but negative at the bottom due to ability sorting effects, and (iii) cross-tax effects of foreign players on domestic players (and vice versa) are negative and quite strong due to displacement effects. Finally, we estimate tax revenue maximizing rates and draw policy conclusions.

Career Prospects and Effort Incentives: Evidence from Professional Soccer

“…29 Table 4 shows the results of logit regressions of actual Euro 2008 team selections on selection ratio. 30 The estimates confirm that Euro 2008 team selections were highly correlated with past selections: the model in column (1) with selection ratio over the entire 30 months as the only regressor predicts 93% of selections correctly. Column (2) shows that recent selections are more predictive than more distant selections.…”

Taxing High-Income Earners: Tax Avoidance and Mobility

“…Furthermore, extensive cross-country differences in tax policies (from preferential tax regimes to variation in tax rates) make this labour market especially suitable to analyse the impact of taxation (personal income tax, payroll tax and VAT) on mobility. Kleven et al (2013) show extensive empirical evidence about how taxes have affected the allocation of football players in 14 European countries since 1985.…”

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Money at the Docks of Tax Havens: A Guide

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