Tax Competition and Employment

83 Pages Posted: 23 Nov 2019 Last revised: 5 Dec 2019

See all articles by Stephen Glaeser

Stephen Glaeser

University of North Carolina (UNC) at Chapel Hill - Accounting Area

Marcel Olbert

University of Mannheim - Business School

Ann-Catherin Werner

University of Mannheim Business School

Date Written: November 12, 2019

Abstract

We examine the effects of tax competition on domestic employment. We find that increases in corporate statutory tax rate differentials between domestic and foreign firms reduce domestic employment through the distinct channels of import competition and competition from foreign-owned domestic firms. These effects are stronger for domestic firms located in countries with less labor organization, non-service firms, firms with fewer intangible assets, and standalone firms. Tax competition appears to primarily affect domestic employment via changes in within-firm employment at smaller firms. Our results suggest that tax competition can affect domestic employment even when domestic capital or income is immobile.

Keywords: Tax competition, Competition, Employment, Real effects, Trade

JEL Classification: E24, F14, F16, H23, H35

Suggested Citation

Glaeser, Stephen and Olbert, Marcel and Werner, Ann-Catherin, Tax Competition and Employment (November 12, 2019). Available at SSRN: https://ssrn.com/abstract=3485551 or http://dx.doi.org/10.2139/ssrn.3485551

Stephen Glaeser

University of North Carolina (UNC) at Chapel Hill - Accounting Area ( email )

McColl Building
Chapel Hill, NC 27599
United States

Marcel Olbert (Contact Author)

University of Mannheim - Business School ( email )

Schloss Ostfl├╝gel
Mannheim, 68131
Germany

Ann-Catherin Werner

University of Mannheim Business School ( email )

Chair of International Taxation
Schloss
Mannheim, 68131
Germany

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