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The effects of tax incentives for small firms on employment levels

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  • Corseuil, Carlos Henrique
  • Moura, Rodrigo Leandro de

Abstract

This paper will examine the effects of tax incentives for small businesses on employment level evaluating a program with this purpose implemented in Brazil in the 1990s. We first develop a theoretical framework which guides both the de nition of the parameters of interest and their identi cation. Selection problems both into the treatment group and into the data sample are tackled by combining fixed effects methods and regression discontinuity design on alternative sub-samples of a longitudinal database of manufacturing firms. The results show that on the one hand the size composition of the treated fi rms may be changed due to the survival of some smaller firms that would have exited had it not been eligible to the program. On the other hand, the treated firms who do not depend on the program to survive do employ more workers.

Suggested Citation

  • Corseuil, Carlos Henrique & Moura, Rodrigo Leandro de, 2010. "The effects of tax incentives for small firms on employment levels," FGV EPGE Economics Working Papers (Ensaios Economicos da EPGE) 701, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil).
    • Handle: RePEc:fgv:epgewp:701
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    References listed on IDEAS

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    1. repec:fgv:epgrbe:v:66:n:2:a:4 is not listed on IDEAS
    2. Corseuil, Carlos Henrique L. & Foguel, Miguel Nathan, 2012. "Economic expansion and increase in labout market formality: A poaching approach," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 66(2), June.

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