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The Importance of Local Corporate Taxes in Business Location Decisions: Evidence From French Micro Data

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Author Info

  • Roland Rathelot
  • Patrick Sillard

Abstract

Determinants of businesses locations are known to be multiple. Locations of partners and competitors are crucial, as well as the territory's local characteristics. To consider the importance of local taxes we build a Poisson model to explain the number of business creations observed in a given municipality. First results suggest that there are unobserved factors driving firm creation that are positively correlated with the level of local taxes. To deal with this potential source of endogeneity, we present an approach close to Regression Discontinuity Design. We find that, everything else being equal, higher local taxes actually tend to deter firms from setting up in a given zone but the effect is weak. Copyright � 2008 The Author(s).

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Bibliographic Info

Article provided by Royal Economic Society in its journal The Economic Journal.

Volume (Year): 118 (2008)
Issue (Month): 527 (03)
Pages: 499-514

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Handle: RePEc:ecj:econjl:v:118:y:2008:i:527:p:499-514

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Cited by:
  1. Adrien Lorenceau, 2009. "L'impact d'exonérations fiscales sur la création d'établissements et l'emploi en France rurale : une approche par discontinuité de la régression," Working Papers halshs-00575100, HAL.
  2. Federico Revelli, 2012. "Business taxation and economic performance in hierarchical government structures," Working Papers 2012/12, Institut d'Economia de Barcelona (IEB).
  3. Mayer,T. & Mayneris, F. & Py, L., 2013. "The impact of Urban Enterprise Zones on establishment location decisions: Evidence from French ZFUs," Working papers 458, Banque de France.
  4. Hans Bacher & Marius Brülhart, 2013. "Progressive taxes and firm births," International Tax and Public Finance, Springer, vol. 20(1), pages 129-168, February.
  5. Strecker, Nora & Egger, Peter & Radulescu, Doina, 2012. "Effective Labor Taxation and the International Location of Headquarters," Annual Conference 2012 (Goettingen): New Approaches and Challenges for the Labor Market of the 21st Century 62086, Verein für Socialpolitik / German Economic Association.
  6. Corentin Trevien & Pauline Givord & Simon Quantin, 2012. "A Long-Term Evaluation of the First Generation of the French Urban Enterprise Zones," ERSA conference papers ersa12p776, European Regional Science Association.
  7. Adrien Lorenceau, 2009. "L’impact d’exonérations fiscales sur la création d’établissements et l’emploi en France rurale : une approche par discontinuité de la régression," Économie et Statistique, Programme National Persée, vol. 427(1), pages 27-62.
  8. Kolympiris, Christos & Kalaitzandonakes, Nicholas & Miller, Douglas, 2014. "Public funds and local biotechnology firm creation," Research Policy, Elsevier, vol. 43(1), pages 121-137.
  9. Eugster, Beatrix & Parchet, Raphaël, 2013. "Culture and Taxes: Towards Identifying Tax Competition," Economics Working Paper Series 1339, University of St. Gallen, School of Economics and Political Science.
  10. Raphael Parchet, 2012. "Are Local Tax Rates Strategic Complements or Substitutes?," ERSA conference papers ersa12p313, European Regional Science Association.
  11. Manuel Acosta & Daniel Coronado & Esther Flores, 2011. "University spillovers and new business location in high-technology sectors: Spanish evidence," Small Business Economics, Springer, vol. 36(3), pages 365-376, April.

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