A Note on the Impacts of Fiscal Incentives on the Labor Market in Northeast Brazil

Diego Carneiro, Edward Costa, Guilherme Irffi, Pedro Veloso, Marleton Braz , Thyena Karen Dias and Vanessa Andrade

Revista Brasileira de Economia - RBE, 2025, vol. 79, issue 1

Abstract: Regional inequality has long been a historical issue in Brazil. Among the various strategies employed to mitigate it, the use of fiscal incentives to encourage companies to establish themselves in less developed regions stands out. Despite being extensively utilized, evidence regarding the effectiveness of such incentives is not unanimous. Therefore, this study aims to evaluate the effect of a significant federal fiscal incentive, a 75% reduction in Corporate Income Tax (IRPJ), on the labor market in the Northeast Region. To do so, an exclusive database was employed, allowing the identification of companies that received the incentive since 2006. The staggered differences-in-differences method was used, comparing companies that received the incentive with those that did not. The results showed that the policy increased formal job positions in beneficiary companies by 9.82%. This suggests that the policy was successful in achieving its objective of contributing to the development of the region.

Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://periodicos.fgv.br/rbe/article/view/91348 (text/html)

Related works:
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:fgv:epgrbe:v:79:y:2025:i:1:a:91348

Access Statistics for this article

Revista Brasileira de Economia - RBE is currently edited by Ricardo Cavalcanti

More articles in Revista Brasileira de Economia - RBE from EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil) Contact information at EDIRC.
Bibliographic data for series maintained by Núcleo de Computação da FGV EPGE ().