30 Pages Posted: 21 Sep 2011
Date Written: September 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.
Suggested Citation: Suggested Citation
Duranton, Gilles and Gobillon, Laurent and Overman, Henry G., Assessing the Effects of Local Taxation Using Microgeographic Data (September 2011). The Economic Journal, Vol. 121, Issue 555, pp. 1017-1046, 2011. Available at SSRN: https://ssrn.com/abstract=1931362 or http://dx.doi.org/10.1111/j.1468-0297.2011.02439.x
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