IDEAS home Printed from https://ideas.repec.org/a/taf/jbemgt/v18y2017i3p412-426.html
   My bibliography  Save this article

Impact of corporate taxation on unemployment

Author

Listed:
  • Aras Zirgulis
  • Tadas Šarapovas

Abstract

We study the effect of corporate taxation on unemployment utilizing a dynamic panel covering 41 countries over 11 years. The purpose of this article is to investigate how changes in the corporate income tax affect unemployment. We employ system general method of moments (GMM) due to peculiarities of the data set and the endogeneity issues present in the research problem. We find that a rise in the effective average corporate tax rate significantly increases unemployment levels, which directly contradicts past findings of some seminal authors. In addition, the present research supports findings of past studies on capital tax elasticity that obtained similar insights using differing methodologies. This research lays the groundwork for future studies, which may take the same methodology and apply it to even larger international panels. This research implies that international tax competition is affecting unemployment, presumably through its effects on international capital investment. These results provide support for policy makers who may be wary of raising corporate tax rates in countries where capital is especially mobile because of the negative effects which may accumulate to the voting public in the form of unemployment.

Suggested Citation

  • Aras Zirgulis & Tadas Šarapovas, 2017. "Impact of corporate taxation on unemployment," Journal of Business Economics and Management, Taylor & Francis Journals, vol. 18(3), pages 412-426, May.
    • Handle: RePEc:taf:jbemgt:v:18:y:2017:i:3:p:412-426
    DOI: 10.3846/16111699.2016.1278400
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.3846/16111699.2016.1278400
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.3846/16111699.2016.1278400?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Toshiki Tamai & Gareth Myles, 2022. "Unemployment, tax competition, and tax transfer policy," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 24(3), pages 470-503, June.
    2. Yuya Kikuchi & Toshiki Tamai, 2019. "Tax competition, unemployment, and intergovernmental transfers," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 26(4), pages 899-918, August.
    3. Ashiru IBRAHIM, 2023. "Analysing The Impact Of Fiscal Policy On Unemployment In Nigeria," Oradea Journal of Business and Economics, University of Oradea, Faculty of Economics, vol. 8(2), pages 61-72, September.
    4. Antonio Estache & Brigitta Gersey, 2018. "Do Corporate Income Tax Rates Cuts Create Jobs? The European Experience," Working Papers ECARES 2018-01, ULB -- Universite Libre de Bruxelles.
    5. Toshiki Tamai, 2022. "Unemployment, Fiscal Competition, and the Composition of Public Expenditure," KIER Working Papers 1072, Kyoto University, Institute of Economic Research.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:jbemgt:v:18:y:2017:i:3:p:412-426. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/TBEM20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.