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Assessing the Effects of Local Taxation using MicroGeographic Data

Author

Listed:
  • Gilles Duranton

    (University of Toronto)

  • Laurent Gobillon

    (PSE - Paris-Jourdan Sciences Economiques - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique, PSE - Paris School of Economics - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École des Ponts ParisTech - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, INED - Institut national d'études démographiques)

  • Henri G. Overman

    (LSE - London School of Economics and Political Science)

Abstract

We study the impact of local taxation on the location and growth of firms. Our empirical methodology pairs establishments across jurisdictional boundaries to estimate the impact of taxation. Our approach improves on existing work as it corrects for unobserved establishment heterogeneity, for unobserved time-varying site-specific effects and for the endogeneity of local taxation. Applied to data for English manufacturing establishments, we find that local taxation has a negative impact on employment growth but no effect on entry.

Suggested Citation

  • Gilles Duranton & Laurent Gobillon & Henri G. Overman, 2011. "Assessing the Effects of Local Taxation using MicroGeographic Data," PSE-Ecole d'économie de Paris (Postprint) halshs-00754517, HAL.
    • Handle: RePEc:hal:pseptp:halshs-00754517
    DOI: 10.1111/j.1468-0297.2011.02439.x
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy

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