Employment, Wages, and Dividend Taxation

FAccT Center Working Paper Nr. 18/2014

9 Pages Posted: 3 Sep 2014

See all articles by Annette Alstadsæter

Annette Alstadsæter

School of Economics and Business, NMBU

Martin Jacob

WHU - Otto Beisheim School of Management

Altin Vejsiu

Uppsala University - Department of Economics

Date Written: September 1, 2014

Abstract

This paper tests the effect of dividend taxation on employment. Since dividend taxation affects real investments, tax-induced changes in real investments should map into employment effects. Using a difference-in-difference approach around the Swedish 2006 dividend tax cut and unique corporate-level data with income tax information on every employee, we find robust evidence of dividend tax-induced employment effects. In response to the dividend cut, both employment and wage levels increase in cash-constrained firms relative to cash-rich closely held corporations.

Keywords: Dividend taxation, Employment, Wages, Private Firms

JEL Classification: H21, H25

Suggested Citation

Alstadsaeter, Annette and Jacob, Martin and Vejsiu, Altin, Employment, Wages, and Dividend Taxation (September 1, 2014). FAccT Center Working Paper Nr. 18/2014, Available at SSRN: https://ssrn.com/abstract=2490000 or http://dx.doi.org/10.2139/ssrn.2490000

Annette Alstadsaeter

School of Economics and Business, NMBU ( email )

Norwegian University of Life Sciences
As
Norway

HOME PAGE: http://https://sites.google.com/view/annettealstadsater/start

Martin Jacob (Contact Author)

WHU - Otto Beisheim School of Management ( email )

Burgplatz 2
D-56179 Vallendar, 56179
Germany

HOME PAGE: http://www.whu.edu/steuer

Altin Vejsiu

Uppsala University - Department of Economics ( email )

Box 513
SE-75120 Uppsala
Sweden
+46-18-4717092 (Phone)

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