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Assessing the Effects of Local Taxation using Microgeographic Data

Author

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  • Gilles Duranton

    (Crest)

  • Laurent Gobillon

    (Crest)

  • Henry G. Overman

    (Crest)

Abstract

We study the impact of local taxation on the locationand growth of firms. Our empirical methodology pairs establishmentsacross jurisdictional boundaries to estimate the impactof taxation. Our approach improves on existing work as it correctsfor unobserved establishment heterogeneity, for unobservedtimevaryingsitespecificeffects, and for the endogeneity of localtaxation. Applied to data for English manufacturing establishments,we find that local taxation has a negative impact on employmentgrowth, but no effect on entry.

Suggested Citation

  • Gilles Duranton & Laurent Gobillon & Henry G. Overman, 2010. "Assessing the Effects of Local Taxation using Microgeographic Data," Working Papers 2010-47, Center for Research in Economics and Statistics.
  • Handle: RePEc:crs:wpaper:2010-47
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    More about this item

    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy

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