Monday, March 16, 2009

Incentivize Migration

Domestic and international migrants tend to make good entrepreneurs and help to stimulate the economy. Another human capital key to development is a better educated workforce. Smart people attract good companies. They also start businesses. How might your region collect a critical mass of the geographically mobile? One idea is to use targeted tax incentives:

I am also increasingly of the view that targeted tax cuts might work on the personal side of the house as well. If you want to grow the animation industry, give a $4,000 tax credit each year for three years for each person who moves to the province to work in animation or who starts a career in animation here. That would incentivize the workforce in this sector and help offset some of the costs of relocating here for migrants. I am not 100% sold on this notion (it is used in Quebec to stimulate the financial services industry) - but it is worth a close look.

A closer look would start with Quebec. Apparently, tax incentives don't impress Anglophonic talent. The linked article details native English speaking out-migration, but I'd bet that in-migration of the same demographic is failing to offset the talent losses. I'm deeply skeptical of the claim that tax incentives can inform a long-distance migration (i.e. province to province or state to state).

I also doubt that twentysomethings really care about tax credits. Young adult migration might be the very definition of economically irrational. Who else would move to Manhattan for an internship? How about slumming it in Austin because you really enjoyed the SXSW experience? Chew on this:

Sixty-four percent of college-educated young adults have told us in national surveys that first they choose the city they want to live in. Then they look for a job.

Geographers > Economists

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