EconPapers    
Economics at your fingertips  
 

Who pays for a Value Added Tax Hike at an International Border? Evidence from Mexico

Emmanuel Chavez and Cristobal Dominguez
Additional contact information
Cristobal Dominguez: Comision Nacional Bancaria y de Valores

Working Papers from HAL

Abstract: This research studies the effects of a value added tax (VAT) reform at Mexico's international frontiers. The reform raised the VAT rate from 11 to 16 percent at localities close to the international borders. We use the traditional "static" difference-in-differences methodology as well as dynamic difference-in-differences. The treatment group is composed of municipalities in the area where the VAT increased, and the control group is composed of municipalities close to the treatment group. We nd that the VAT hike had a positive effect on prices of around half the size of the full pass-through conter-factual. In addition, the reform had a negative effect on workers' wages and no effect on employment. The negative e ect on workers' real incomes is not smoothed out with credits. We nd evidence of a negative effect on consumption at Mexico's northern border due to the reform. However, we nd no evidence of an increase in shopping at the United States side of the border.

Keywords: Worker purchasing power; Value Added Tax; Taxation; Border Crossing (search for similar items in EconPapers)
Date: 2021-09
New Economics Papers: this item is included in nep-int, nep-pbe and nep-pub
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-03364026
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://shs.hal.science/halshs-03364026/document (application/pdf)

Related works:
Working Paper: Who pays for a Value Added Tax Hike at an International Border? Evidence from Mexico (2021) Downloads
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:hal:wpaper:halshs-03364026

Access Statistics for this paper

More papers in Working Papers from HAL
Bibliographic data for series maintained by CCSD ().

 
Page updated 2024-04-23
Handle: RePEc:hal:wpaper:halshs-03364026