Business Taxation and Wages – Evidence from Individual Panel Data
AbstractEmpirical evidence on the degree of business-tax shifting to employees via the wage level is highly controversial and rare. It remains open to which extent the tax burden is shifted, whether there are differences for tax increases and decreases, or whether there exists some treatment heterogeneity, that drive the respective results. Using a large administrative panel data set, we exploit the regional variation of the German business income taxation to address these issues. Our results suggest an elasticity of wages with respect to business taxes that ranges between –0.28 to –0.46, once we control for invariant unobserved regional and individual characteristics. Workers with low bargaining power, e.g., low-skilled, are affected most from business tax shifting, indicating that business-tax incidence involves distributional effects. Finally, we find evidence for an asymmetric tax incidence.
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Bibliographic InfoPaper provided by Rheinisch-Westfälisches Institut für Wirtschaftsforschung, Ruhr-Universität Bochum, Universität Dortmund, Universität Duisburg-Essen in its series Ruhr Economic Papers with number 0351.
Length: 44 pages
Date of creation: Jul 2012
Date of revision:
Other versions of this item:
- Bauer, Thomas K. & Kasten, Tanja & Siemers, Lars, 2012. "Business Taxation and Wages: Evidence from Individual Panel Data," IZA Discussion Papers 6717, Institute for the Study of Labor (IZA).
- Thomas K. Bauer & Tanja Kasten & Lars-H. Siemers, 2012. "Business Taxation and Wages: Evidence from Individual Panel Data," MAGKS Papers on Economics 201233, Philipps-Universität Marburg, Faculty of Business Administration and Economics, Department of Economics (Volkswirtschaftliche Abteilung).
- Thomas K. Bauer & Tanja Kasten & Lars-H. R. Siemers, 2012. "Business taxation and wages: evidence from individual panel data," Volkswirtschaftliche DiskussionsbeitrÃ¤ge 153-12, Universität Siegen, Fakultät Wirtschaftswissenschaften, Wirtschaftsinformatik und Wirtschaftsrecht.
- H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
- H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
- J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
- J38 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Public Policy
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- Clemens Fuest & Andreas Peichl & Sebastian Siegloch, 2012. "Which Workers Bear the Burden of Corporate Taxation and Which Firms Can Pass It On? Micro Evidence from Germany," Working Papers 1216, Oxford University Centre for Business Taxation.
- Fuest, Clemens & Peichl, Andreas & Siegloch, Sebastian, 2013.
"Do Higher Corporate Taxes Reduce Wages? Micro Evidence from Germany,"
IZA Discussion Papers
7390, Institute for the Study of Labor (IZA).
- Fuest, Clemens & Peichl, Andreas & Siegloch, Sebastian, 2013. "Do higher corporate taxes reduce wages? Micro evidence from Germany," ZEW Discussion Papers 13-039, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Clemens Fuest & Andreas Peichl & Sebastian Siegloch, 2013. "Do Higher Corporate Taxes Reduce Wages? Micro Evidence from Germany," CESifo Working Paper Series 4247, CESifo Group Munich.
- Peichl, Andreas & Fuest, Clemens & Siegloch, Sebastian, 2013. "Wage Incidence of Local Corporate Taxation - Micro Evidence from Germany," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79916, Verein für Socialpolitik / German Economic Association.
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