The effect of effective tax rate differentials and clustering on investment in Belgium
AbstractThis paper looks at the effect of agglomeration economies on the tax sensitivity of investments in Belgian firms using detailed firm-level data. We find a negative effect of taxation on investment. However, this is dampened by the presence of agglomeration externalities. Our results hint to the importance of local labor market and supplying industries for firm investment decisions and follow the more nuanced view on tax competition of the New Economic Geography models.
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Bibliographic InfoPaper provided by Katholieke Universiteit Leuven, Faculteit Economie en Bedrijfswetenschappen, Vives in its series Vives discussion paper series with number 28.
Date of creation: 2012
Date of revision:
This paper has been announced in the following NEP Reports:
- NEP-ACC-2012-09-16 (Accounting & Auditing)
- NEP-ALL-2012-09-16 (All new papers)
- NEP-EUR-2012-09-16 (Microeconomic European Issues)
- NEP-GEO-2012-09-16 (Economic Geography)
- NEP-PBE-2012-09-16 (Public Economics)
- NEP-URE-2012-09-16 (Urban & Real Estate Economics)
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