Shift or Share? Anatomy of Profit Shifting and Distributional Effects on Workers

Giulia Aliprandi, Alice Chiocchetti, Manon Francois and Laure Heidmann

No 12202, CESifo Working Paper Series from CESifo

Abstract: Using exhaustive microdata on the worldwide activity of multinational firms from Country-by-Country Reports linked to employer-employee data, we study how profit shifting affects workers' earnings. We estimate that large French multinationals shift 19% of their foreign profits annually to low-tax jurisdictions, resulting in €10.3 billion shifted out of France and €3.7 billion in lost tax revenues. Exploiting France's mandatory profit-sharing policy, which mechanically links subsidiary-level reported profits to workers' compensation, we show that profit shifting reduces annual employees' earnings by 2.6%. Low-income workers are disproportionately affected, the bottom 10% losing 3.2% of wages compared to 2.3% for top 10% earners. Changing the profit-sharing formula to account for global, rather than subsidiary-level, profitability would increase wages by 1.9% overall and 4.1% for workers in profit-shifting subsidiaries.

Keywords: multinational firms; profit shifting; tax revenue; incidence (search for similar items in EconPapers)
JEL-codes: F23 H25 H26 (search for similar items in EconPapers)
Date: 2025
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.ifo.de/DocDL/cesifo1_wp12202.pdf (application/pdf)

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:ces:ceswps:_12202

Access Statistics for this paper

More papers in CESifo Working Paper Series from CESifo Contact information at EDIRC.
Bibliographic data for series maintained by Klaus Wohlrabe ().