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Treasure Islands, Real Jobs? Workers and Anti-Avoidance Policies in a Tax Paradise

Author

Listed:
  • Sónia Cabral

    (Banco de Portugal - Banco de Portugal)

  • Joana Garcia

    (Banco de Portugal - Banco de Portugal, Universidade No minho)

  • Raquel Miranda

    (Banco de Portugal - Banco de Portugal)

  • Susana Peralta

    (NOVA SBE - NOVA - School of Business and Economics - NOVA - Universidade Nova de Lisboa = NOVA University Lisbon)

  • João Pereira dos Santos

    (QMUL - Queen Mary University of London, ULISBOA - Universidade de Lisboa = University of Lisbon = Université de Lisbonne)

Abstract

This paper offers the first detailed characterization of the labor market in a tax paradise and the first assessment of how a reform aimed at discouraging tax avoidance affected workers. We show that incumbents were highly educated, performed specialized tasks, and benefited from a wage gap, particularly at the top.Immediately after the reform announcement, several workers exited. Stayers experienced wage increases of around 8% and a higher probability of working for several firms simultaneously. New hires earned, on average, 30% less than incumbents, frequently on temporary contracts. The results offer insights into policies promoting economic substance in low-tax jurisdictions.

Suggested Citation

  • Sónia Cabral & Joana Garcia & Raquel Miranda & Susana Peralta & João Pereira dos Santos, 2025. "Treasure Islands, Real Jobs? Workers and Anti-Avoidance Policies in a Tax Paradise," Working Papers halshs-04940227, HAL.
    • Handle: RePEc:hal:wpaper:halshs-04940227
    Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-04940227v1
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    Keywords

    corporate tax avoidance; labor market; substance requirements; matched employer-employee data;
    All these keywords.

    JEL classification:

    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General

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