Killing a second bird with one stone? Promoting firm capital growth and exports through tax policy

Michele Bernini and Tania Treibich

Industrial and Corporate Change, 2016, vol. 25, issue 5, 829-845

Abstract: Does a lower tax rate on profits promote the international activity of small and medium enterprises? This article addresses this question by exploiting a policy experiment in France. A reduction in corporate taxation is found to boost small and medium enterprises’ capital growth and export participation, but to reduce employment growth. We estimate that a 50% reduction in the statutory tax rate induces, on average, a 29% increase in capital and a 6% increase in individual firms’ probability of exporting. However, the estimated average treatment effect on the treated conceals substantial heterogeneity across firms with different initial productivity and size.

JEL-codes: C21 C26 D24 F14 H25 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (1)

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