Productivity Slowdown and Tax Havens: Where Is Measured Value Creation?

Jean-Charles Bricongne, Samuel Delpeuch () and Margarita Lopez Forero
Additional contact information
Samuel Delpeuch: ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique

SciencePo Working papers Main from HAL

Abstract: Based on French firm-level data over 15 years we evaluate the contribution of the microlevel profit-shifting-through tax haven foreign direct investments to the aggregate productivity slowdown measured in France. We show that firm measured productivity in France declines over the immediate years following the establishment in a tax haven, with an average estimated around 3.5% in labor apparent productivity. To isolate the contribution of multinationals' tax optimization to this decline of apparent productivity, we then exploit the 2006 Cadbury-Schweppes decision of the European Court of Justice limiting the extent to which member States can counter European MNEs' tax planning strategies. We find that multinational groups benefiting from that loosening of the legal constraints do exhibit lower apparent productivity in France following that ruling. Our results moreover suggest that this bias is bigger when firms rely more intensively on intangible capital. Finally, given these firms' weight in the economy, our results imply an annual loss of 9.7% in terms of the aggregate annual labor productivity growth.

Keywords: Profit-shifting FDI; Productivity slowdown; Productivity mismeasurement; Intangible capital; Tax Havens (search for similar items in EconPapers)
Date: 2022-04-15
New Economics Papers: this item is included in nep-eff and nep-pbe
Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-03811359v1
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://sciencespo.hal.science/hal-03811359v1/document (application/pdf)

Related works:
Journal Article: Productivity slowdown and tax havens: Where is measured value creation? (2023)
Working Paper: Productivity slowdown and tax havens: Where is measured value creation? (2023)
Working Paper: Productivity slowdown and tax havens: Where is measured value creation? (2023)
Working Paper: Productivity Slowdown and Tax Havens: Where Is Measured Value Creation? (2022)
Working Paper: Productivity Slowdown and Tax Havens: Where Is Measured Value Creation? (2022)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:spmain:hal-03811359

Access Statistics for this paper

More papers in SciencePo Working papers Main from HAL
Bibliographic data for series maintained by Contact - Sciences Po Departement of Economics ().