Do Corporate Taxes Affect Workplace Safety?

51 Pages Posted: 1 Aug 2018 Last revised: 18 Oct 2018

See all articles by Daniel Bradley

Daniel Bradley

University of South Florida

Connie X. Mao

Temple University - Fox School of Business and Management; Temple University - Department of Finance

Chi Zhang

University of Massachusetts Lowell

Date Written: July 31, 2018

Abstract

We examine how workplace injury rates change when firms are subject to a corporate tax shock. We find that tax increases lead to a significance increase in reported injuries, but tax decreases have no similar effect. Our difference-in-differences empirical strategy relies on staggered state-level corporate tax changes that exploits spatial discontinuity in treatment and control establishments located in contiguous border counties within the same firm. The results are strongest in industries with low union bargaining power, for firms with high marginal tax rates, poor safety culture scores, firms that barely meet or beat analysts’ earnings forecasts and firms that hire seasonal workers. Our results suggest that tax increases lead to real effects at the expense of employees, with no similar benefit accruing for tax cuts.

Keywords: workplace safety, employee welfare, corporate taxes, natural experiments

JEL Classification: G30; H25; H32; J28; K32

Suggested Citation

Bradley, Daniel and Mao, Connie X. and Zhang, Chi, Do Corporate Taxes Affect Workplace Safety? (July 31, 2018). Fox School of Business Research Paper No. 18-036. Available at SSRN: https://ssrn.com/abstract=3223949 or http://dx.doi.org/10.2139/ssrn.3223949

Daniel Bradley (Contact Author)

University of South Florida ( email )

Tampa, FL 33620
United States

Connie X. Mao

Temple University - Fox School of Business and Management ( email )

416 Alter Hall
Philadelphia, PA 19122
United States
215-204-4895 (Phone)
215-204-1697 (Fax)

Temple University - Department of Finance ( email )

Fox School of Business and Management
Philadelphia, PA 19122
United States
215-204-4895 (Phone)
215-204-1697 (Fax)

Chi Zhang

University of Massachusetts Lowell ( email )

Pulichino Tong Building
Manning School of Business
Lowell, MA 01854
United States

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