Employment, Wages, and Dividend Taxation
FAccT Center Working Paper Nr. 18/2014
9 Pages Posted: 3 Sep 2014
Date Written: September 1, 2014
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: Suggested Citation