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Treasure Islands, Real Jobs? Workers and Anti-Avoidance Policies in a Tax Paradise

Author

Listed:
  • Sónia Cabral

    (Banco de Portugal)

  • Joana Garcia

    (Banco de Portugal and NIPE/Universidade do Minho)

  • Raquel Miranda

    (Banco de Portugal)

  • Susana Peralta

    (Nova School of Business and Economics)

  • João Pereira dos Santos

    (Queen Mary University of London, ISEG University of Lisbon, REM/UECE and IZA Institute of Labor Economics)

Abstract

TThis paper offers the first detailed characterization of the labor market in a tax paradise and the first assessment of how a reform aimed at discouraging tax avoidance affected workers. We show that incumbents were highly educated, performed specialized tasks, and benefited from a wage gap, particularly at the top. Immediately after the reform announcement, several workers exited. Stayers experienced wage increases of around 8% and a higher probability of working for several firms simultaneously. New hires earned, on average, 30% less than incumbents, frequently on temporary contracts. The results offer insights into policies promoting economic substance in low-tax jurisdictions.

Suggested Citation

  • Sónia Cabral & Joana Garcia & Raquel Miranda & Susana Peralta & João Pereira dos Santos, 2025. "Treasure Islands, Real Jobs? Workers and Anti-Avoidance Policies in a Tax Paradise," Working Papers 026, EU Tax Observatory.
    • Handle: RePEc:dbp:wpaper:026
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    References listed on IDEAS

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    Keywords

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    JEL classification:

    • J08 - Labor and Demographic Economics - - General - - - Labor Economics Policies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • 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
    • J48 - Labor and Demographic Economics - - Particular Labor Markets - - - Particular Labor Markets; Public Policy
    • H30 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - General

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