The effect of local taxes on firm performance: evidence from geo referenced data

Federico Belotti, Edoardo Di Porto and Gianluca Santoni

Working Papers from CEPII research center

Abstract: This paper investigates the impact of business property taxation on firms' performance using a panel of italian manufacturing firms. To account for endogeneity in local taxation, we exploit a pairwise spatial differenced generalized method of moments estimator. As well as providing robust inference, we also improve on existing work by exploiting the exogenous variation in local taxes generated by the political alignment of each local government with the central one. We find that property taxation exerts a negative impact on firms' employment, capital and sales to such an extent as to significantly affect total factor productivity.

Keywords: local taxation; endogeneity; spatial differencing; two-way clustering (search for similar items in EconPapers)
JEL-codes: H22 H71 R38 (search for similar items in EconPapers)
Date: 2016-02
New Economics Papers: this item is included in nep-eff, nep-eur, nep-geo, nep-pbe and nep-ure
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

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Related works:
Journal Article: The effect of local taxes on firm performance: Evidence from geo‐referenced data (2021)
Working Paper: The effect of local taxes on firm performance: evidence from geo-referenced data (2016)
Working Paper: The Effect of Local Taxes on Firm Performance: Evidence from Geo-referenced Data (2016)
Working Paper: The Effect of Local Taxes on Firm Performance: Evidence from Geo-referenced Data (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:cii:cepidt:2016-03

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