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Productivity Slowdown and Tax Havens: Where Is Measured Value Creation?

Jean-Charles Bricongne, Samuel Delpeuch () and Margarita Lopez Forero
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Samuel Delpeuch: ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique

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Abstract: Based on French firm-level data over 15 years we evaluate the contribution of the microlevel profit-shifting-through tax haven foreign direct investments to the aggregate productivity slowdown measured in France. We show that firm measured productivity in France declines over the immediate years following the establishment in a tax haven, with an average estimated around 3.5% in labor apparent productivity. To isolate the contribution of multinationals' tax optimization to this decline of apparent productivity, we then exploit the 2006 Cadbury-Schweppes decision of the European Court of Justice limiting the extent to which member States can counter European MNEs' tax planning strategies. We find that multinational groups benefiting from that loosening of the legal constraints do exhibit lower apparent productivity in France following that ruling. Our results moreover suggest that this bias is bigger when firms rely more intensively on intangible capital. Finally, given these firms' weight in the economy, our results imply an annual loss of 9.7% in terms of the aggregate annual labor productivity growth.

Keywords: Profit-shifting FDI; Productivity slowdown; Productivity mismeasurement; Intangible capital; Tax Havens (search for similar items in EconPapers)
Date: 2022-04-15
New Economics Papers: this item is included in nep-eff, nep-eur and nep-pbe
Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-03811359
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Related works:
Journal Article: Productivity slowdown and tax havens: Where is measured value creation? (2023) Downloads
Working Paper: Productivity slowdown and tax havens: Where is measured value creation? (2023)
Working Paper: Productivity slowdown and tax havens: Where is measured value creation? (2023)
Working Paper: Productivity Slowdown and Tax Havens: Where Is Measured Value Creation? (2022) Downloads
Working Paper: Productivity Slowdown and Tax Havens: Where Is Measured Value Creation? (2022) Downloads
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