Assessing the Effects of Local Taxation Using Microgeographic Data
London School of Economics & Political Science (LSE) - Department of Geography and Environment; Centre for Economic Policy Research (CEPR)
National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST); National Institute of Demographic Studies (INED)
Henry G. Overman
London School of Economics (LSE) - Department of Geography and Environment; Centre for Economic Policy Research (CEPR)
The Economic Journal, Vol. 121, Issue 555, pp. 1017-1046, 2011
We study the impact of local taxation on the location and growth of firms. Our empirical methodology pairs establishments across jurisdictional boundaries to estimate the impact of taxation. Our approach improves on existing work as it corrects for unobserved establishment heterogeneity, for unobserved time‐varying site‐specific effects and for the endogeneity of local taxation. Applied to data for English manufacturing establishments, we find that local taxation has a negative impact on employment growth but no effect on entry.
Number of Pages in PDF File: 30
Date posted: September 21, 2011
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