Do Wages Rise when Corporate Taxes Fall? - Evidence from Germany's Tax Reform 2000
Nils aus dem Moore,
Tanja Kasten and
Christoph Schmidt
No 532, Ruhr Economic Papers from RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen
Abstract:
We contribute to the empirical literature on the effective incidence of corporate income taxation by using the German Business Tax Reform of the year 2000 (GBTR 2000) as a natural experiment. Its effect on wages in the manufacturing sector is identified by means of a difference-in-differences analysis that uses French firms as comparison group. We provide evidence that GBTR 2000 led to a significant and sizeable wage effect. For 2001, the first year after GBTR 2000 took effect, we estimate a short-run effect that implies a wage increase of 7.9 percent. Due to the dynamic nature of the empirical model used, the incidence effect grows gradually over time during the evaluation period.
Keywords: corporate income taxation; tax reform; tax incidence; profit taxation; wages; diff erence-in-diff erences (search for similar items in EconPapers)
JEL-codes: H22 H25 J31 J38 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (6)
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:rwirep:532
DOI: 10.4419/86788609
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