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Assessing the effects of local taxation using microgeographic data

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  • Duranton, Gilles
  • Gobillon, Laurent
  • Overman, Henry G.

Abstract

We study the impact of local taxation on the location and growth of firms. Our empirical methodology pairs establishments across jurisdictional boundaries to estimate the impact of taxation. Our approach improves on existing work as it corrects for unobserved establishment heterogeneity, for unobserved time-varying site-specific effects and for the endogeneity of local taxation. Applied to data for English manufacturing establishments, we find that local taxation has a negative impact on employment growth but no effect on entry.

Suggested Citation

  • Duranton, Gilles & Gobillon, Laurent & Overman, Henry G., 2011. "Assessing the effects of local taxation using microgeographic data," LSE Research Online Documents on Economics 41367, London School of Economics and Political Science, LSE Library.
    • Handle: RePEc:ehl:lserod:41367
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    File URL: https://researchonline.lse.ac.uk/id/eprint/41367/
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    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook

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