The Global Migration of Talent and Tax Incentives: Evidence from Malaysia's Returning Expert Program
September 28, 2016DECRG Kuala Lumpur Seminar Series

This paper presents the first evidence on the efficacy of a major program designed to encourage the return migration of high-skilled individuals. The Malaysian Returning Expert Program (REP) targets high-skilled Malaysians abroad and provides them with tax incentives to return. At several eligibility thresholds the probability of acceptance to the program increases discontinuously. Using administrative data on applicants this allows us to identify the impact of acceptance to the REP on the probability of returning to Malaysia. Our fuzzy regression discontinuity design estimates suggest that program approval increases the return probability by 40 percent for applicants with a pre-existing job offer in Malaysia.

There is no significant treatment effect for those who apply without a job offer. The estimated migration elasticity with respect to the net-of-tax rate, averaged across all applicants, is 1.2. We conduct a fiscal cost-benefit analysis of the REP and find a modest net fiscal effect of the program, between minus $6,900 and plus $4,200 per applicant, suggesting that the program roughly pays for itself.

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  • Caglar Ozden, a Turkish national, is a Senior Economist in the World Bank's Development Research Group (Trade and Integration team). He received his undergraduate degrees in economics and industrial engineering from Cornell University and his PhD. in economics from Stanford University. Prior to joining the World Bank six years ago, he was on the faculty of the economics department at Emory University. His research explores the nexus of globalization of product and labor markets, government policies and economic development. He has published numerous papers in leading academic journals which explored the dynamics of protectionist trade policies, adverse consequences of unilateral trade preferences, placement of highly educated migrants in unskilled jobs in the US labor market - the brain waste effect. His most current research explores the role of diasporas and social networks on migration flows and patterns, performance of migrants in the destination labor markets, linkages between migration, trade, and foreign direct investment flows and causes of the migration decisions of physicians from sub-Saharan Africa. He has edited three books on migration, remittances, brain drain, and their impact on economic development. The latest, International Migration, Economic Development and Policy, was published in 2007.
  • When: Wednesday, September 28, 2016; 4:00-5:30PM
  • Where: World Bank Malaysia Office, Level 3, Sasana Kijang, No. 2, Jalan Dato’ Onn
  • RSVP: Kindly RSVP by Tuesday, September 27, 2016