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Reply: Do firms that pay less company tax create more jobs?

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  • Leigh, Andrew

Abstract

Using data for around 1000 profitable Australian firms, Leigh (2018) explores the relationship between effective tax rates and job creation. On average, employment growth is slower at firms which pay less tax, a result that is robust across multiple specifications. Davidson (2018) speculates that this result might not hold up under certain conditions, and proposes including adding different combinations of control variables, changing the functional form, and controlling for firm profitability. Following his suggestions, I carry out eight new robustness checks, all of which produce results consistent with the original paper. This analysis reinforces the key finding of the original paper: firms that pay less tax do not create more jobs.

Suggested Citation

  • Leigh, Andrew, 2018. "Reply: Do firms that pay less company tax create more jobs?," Economic Analysis and Policy, Elsevier, vol. 59(C), pages 113-115.
    • Handle: RePEc:eee:ecanpo:v:59:y:2018:i:c:p:113-115
    DOI: 10.1016/j.eap.2018.05.003
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    1. Leigh, Andrew, 2018. "Do firms that pay less company tax create more jobs?," Economic Analysis and Policy, Elsevier, vol. 59(C), pages 25-28.
    2. Davidson, Sinclair, 2018. "Comment: Do firms that pay less company tax create more jobs? Volume 59, September 2018, Pages 25–28," Economic Analysis and Policy, Elsevier, vol. 59(C), pages 127-129.
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    Cited by:

    1. Davidson, Sinclair, 2018. "Comment: Do firms that pay less company tax create more jobs? Volume 59, September 2018, Pages 25–28," Economic Analysis and Policy, Elsevier, vol. 59(C), pages 127-129.

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    1. Davidson, Sinclair, 2018. "Comment: Do firms that pay less company tax create more jobs? Volume 59, September 2018, Pages 25–28," Economic Analysis and Policy, Elsevier, vol. 59(C), pages 127-129.

    More about this item

    Keywords

    Corporate income tax; Employment;

    JEL classification:

    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis

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