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Gemmell, Norman and Kneller, Richard and McGowan, Danny and Sanz, Ismael and Sanz Sanz, José Félix (2018) Corporate Taxation and Productivity Catch-Up: Evidence from European firms. Scandinavian Journal of Economics, 120 (2). pp. 372-399. ISSN 0347-0520
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Official URL: https://doi.org/10.1111/sjoe.12212
Abstract
In this paper, we explore whether higher corporate tax rates, because they lower the after-tax returns to productivity-enhancing investments, reduce the speed with which small firms converge to the productivity frontier. Using data for 11 European countries, we find evidence that their productivity catch-up is slower when the statutory corporate tax rates are higher. In contrast, we find that large firms are instead affected by effective marginal rates. Using the reduced-form model of productivity convergence of Griffith et al. (2009, Journal of Regional Science 49, 689–720), our results are robust to a host of robustness checks and a natural experiment that exploits the 2001 German tax reforms.
Item Type: | Article |
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Uncontrolled Keywords: | Convergence; Firms; Productivity; Taxation |
Subjects: | Social sciences > Economics > Economic development Social sciences > Economics > Public economy Social sciences > Economics > Microeconomics Social sciences > Economics > Industrial organization |
JEL: | D24, H25, L11, O31 |
ID Code: | 60421 |
Deposited On: | 08 May 2020 11:02 |
Last Modified: | 13 May 2020 07:57 |
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