The Importance of Local Corporate Taxes in Business Location Decisions: Evidence from French Micro Data

16 Pages Posted: 26 Feb 2008

See all articles by Roland Rathelot

Roland Rathelot

University of Warwick - Department of Economics

Patrick Sillard

affiliation not provided to SSRN

Date Written: 0000

Abstract

Determinants of businesses locations are known to be multiple. Locations of partners and competitors are crucial, as well as the territory's local characteristics. To consider the importance of local taxes we build a Poisson model to explain the number of business creations observed in a given municipality. First results suggest that there are unobserved factors driving firm creation that are positively correlated with the level of local taxes. To deal with this potential source of endogeneity, we present an approach close to Regression Discontinuity Design. We find that, everything else being equal, higher local taxes actually tend to deter firms from setting up in a given zone but the effect is weak.

Suggested Citation

Rathelot, Roland and Sillard, Patrick, The Importance of Local Corporate Taxes in Business Location Decisions: Evidence from French Micro Data (0000). The Economic Journal, Vol. 118, Issue 527, pp. 499-514, March 2008, Available at SSRN: https://ssrn.com/abstract=1096384 or http://dx.doi.org/10.1111/j.1468-0297.2007.02131.x

Roland Rathelot (Contact Author)

University of Warwick - Department of Economics ( email )

Coventry CV4 7AL
United Kingdom

Patrick Sillard

affiliation not provided to SSRN

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