Interstate Business Tax Differentials and New Firm Location: Evidence from Panel Data

29 Pages Posted: 17 Oct 2007 Last revised: 15 Sep 2010

See all articles by Leslie E. Papke

Leslie E. Papke

Michigan State University - Department of Economics; National Bureau of Economic Research (NBER)

Date Written: November 1989

Abstract

This paper examines the impact of state and local tax differentials on the location of industry using a panel data set of manufacturing firm startups. The number of firm births is modeled as a Poisson count process and the estimation technique explicitly accounts for unobserved location or state heterogeneity in the estimation. A second focus of the analysis is the development of an industry and year specific series of effective tax rates for each state. After controlling for state and industry effects, the estimates indicate that a high state marginal effective tax rate reduces the number of firm births for most industries examined.

Suggested Citation

Papke, Leslie E., Interstate Business Tax Differentials and New Firm Location: Evidence from Panel Data (November 1989). NBER Working Paper No. w3184. Available at SSRN: https://ssrn.com/abstract=467635

Leslie E. Papke (Contact Author)

Michigan State University - Department of Economics ( email )

East Lansing, MI 48824
United States
517-355-3773 (Phone)
517-432-1068 (Fax)

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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