Tariffs, Employment and the Balance of Trade

Sweder van Wijnbergen
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Sweder van Wijnbergen: University of Amsterdam

No 26-088/VI, Tinbergen Institute Discussion Papers from Tinbergen Institute

Abstract: We study whether firms share gains from innovation tax incentives with incumbent workers and whether such rent sharing is associated with increased worker retention. The Dutch innovation box reduces tax rates on profits from in-house innovation. Linking first-time beneficiaries to matched employer-employee data, we combine nearest-neighbour matching with staggered difference-in-differences. Part of the additional after-tax surplus is passed on to incumbent workers: wages rise by 3.27% on average, with increases of 2.05% for workers least involved in R&D and 4.14% for tertiary-educated STEM workers. Descriptively, treated non-R&D incumbents are 3.47 percentage points less likely to switch employers following treatment.

Keywords: Tariffs; Intermediate Goods; Real Exchange Rate; Employment; Trade Balance (search for similar items in EconPapers)
Date: 2026-11-01
New Economics Papers: this item is included in nep-bec
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