Transfer-pricing and Measured Productivity of Multinational Firms
AbstractThis paper examines the diferences in total factor productivity (TFP) between multinationals and domestic firms before and after tax rate changes to investigate whether the host country corporate tax rate has a significant influence on the measured TFP advantage of multinational companies. Using a difference-in-differences approach on a sample of approximately 16,000 European firms (1998-2004), we find that a 10 percentage points cut in the statutory corporate tax rate would increase multinationals' measured TFP by about 10% relative to domestic firms, consistent with profit-shifting by multinationals. At the sample mean, this would imply a 44% increase in the TFP advantage of multinationals.
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Bibliographic InfoPaper provided by Oxford University Centre for Business Taxation in its series Working Papers with number 0817.
Date of creation: 2008
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multinational firms; total factor productivity; corporate taxation; profit shifting;
Find related papers by JEL classification:
- D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
- H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
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