Do Higher Corporate Taxes Reduce Wages? Micro Evidence from Germany
Clemens Fuest,
Andreas Peichl and
Sebastian Siegloch ()
Additional contact information
Sebastian Siegloch: University of Cologne
No 7390, IZA Discussion Papers from Institute of Labor Economics (IZA)
Abstract:
Because of endogeneity problems very few studies have been able to identify the incidence of corporate taxes on wages. We circumvent these problems by using an 11-year panel of data on 11,441 German municipalities' tax rates, 8 percent of which change each year, linked to administrative matched employer-employee data. Consistent with our theoretical model, we find a negative effect of corporate taxation on wages: a 1 euro increase in tax liabilities yields a 77 cent decrease in the wage bill. The direct wage effect, arising in a collective bargaining context, dominates, while the conventional indirect wage effect through reduced investment is empirically small due to regional labor mobility. High and medium-skilled workers, who arguably extract higher rents in collective agreements, bear a larger share of the corporate tax burden.
Keywords: administrative data; wage incidence; business tax; local taxation (search for similar items in EconPapers)
JEL-codes: H2 H7 J3 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2013-05
New Economics Papers: this item is included in nep-acc, nep-eur, nep-hme, nep-lab, nep-lma, nep-ltv and nep-pbe
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (51)
Downloads: (external link)
https://docs.iza.org/dp7390.pdf (application/pdf)
Related works:
Journal Article: Do Higher Corporate Taxes Reduce Wages? Micro Evidence from Germany (2018) 
Working Paper: Do Higher Corporate Taxes Reduce Wages? Micro Evidence from Germany (2017) 
Working Paper: Do higher corporate taxes reduce wages? Micro evidence from Germany (2016) 
Working Paper: Do Higher Corporate Taxes Reduce Wages? Micro Evidence from Germany (2013) 
Working Paper: Do higher corporate taxes reduce wages? Micro evidence from Germany (2013) 
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:iza:izadps:dp7390
Ordering information: This working paper can be ordered from
IZA, Margard Ody, P.O. Box 7240, D-53072 Bonn, Germany
Access Statistics for this paper
More papers in IZA Discussion Papers from Institute of Labor Economics (IZA) IZA, P.O. Box 7240, D-53072 Bonn, Germany. Contact information at EDIRC.
Bibliographic data for series maintained by Holger Hinte ().