Do Brazilian Publicly Traded Companies That Pay Less Tax Create More Jobs?

19 Pages Posted: 3 Jun 2019

See all articles by Antonio Lopo Martinez

Antonio Lopo Martinez

University of Coimbra; University of Salamanca

Raimundo da Silva

FUCAPE Business School

Date Written: May 11, 2019


This article studies whether there is an association between effective tax rate and job creation in private companies, based on a tax accounting perspective. In macroeconomic terms, there is a widespread assumption – challenged by authors such as Anderson and Pizzigati (2017) – indicating that lower corporate taxation will lead to higher rates of job creation. The study explores the relationship between job creation and three proxies of tax avoidance, or tax aggressiveness, in Brazilian non-financial firms listed in the country’s stock exchange B3, in the period between 2011 and 2016. The estimates were conducted using the methods of ordinary least squares (OLS), and quantile regression. The results obtained from the estimates using OLS did not present significant evidence of an association between the rate of job creation and effective tax rates. Regarding the method of quantile regressions, it was possible to find a significant and positive relationship between job creation and effective tax rates, exclusively in quantile 25 of the effective tax rate on value added. Quantiles 50 and 75 presented negative relationships between job creation and effective tax rates in the different tax aggressiveness metrics. The results suggest that the firm’s tax aggressiveness profile influences the relationship. While in the less tax aggressive companies the reduction of the tax burden would potentially stimulate job creation, in those more tax aggressive the tax break may lead to the undesirable effect of a fall in job creation. This innovative and relevant study raises questions about the social efficiency of a general reduction of corporate taxes.

Keywords: Tax aggressiveness, Market risk, Idiosyncratic risk

JEL Classification: M4, K34

Suggested Citation

Martinez, Antonio Lopo and da Silva, Raimundo, Do Brazilian Publicly Traded Companies That Pay Less Tax Create More Jobs? (May 11, 2019). Available at SSRN: or

Antonio Lopo Martinez (Contact Author)

University of Coimbra ( email )

Pátio das Escolas

University of Salamanca ( email )

Campus Miguel de Unamuno
Salamanca, Salamanca 23007

Raimundo Da Silva

FUCAPE Business School ( email )

Fernando Ferrari Avenue, 1358
Vitória, Espirtio Santo 29075-010

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