Treasure Islands, Real Jobs? Workers and Anti-Avoidance Policies in a Tax Paradise

Sonia Cabral (), Joana Garcia, Raquel Miranda, Susana Peralta and João Pereira dos Santos

Working Papers from Banco de Portugal, Economics and Research Department

Abstract: This paper offers the first detailed characterization of the labor market in a tax paradise and the first assessment of how a reform aimed at discouraging international tax avoidance affects workers in such a location. Our findings reveal that incumbent workers, who were relatively few compared to firms’ profits, were highly educated, performed specialized tasks, and benefited from a wage gap, particularly large at the top. Immediately after the reform announcement, several workers exited. Stayers had a higher probability of working for several firms simultaneously and experienced wage increases of around 8% two years after the reform, representing a small cost relative to firms’ tax benefits. New workers who moved post-reform earned wages that were, on average, 30% lower than incumbents and were more likely to be on temporary contracts. These results provide valuable insights into policies aimed at increasing economic substance in low-tax jurisdictions.

JEL-codes: F23 H26 H30 J31 J38 (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-iue and nep-pbe
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https://www.bportugal.pt/sites/default/files/documents/2024-11/WP202416.pdf

Related works:
Working Paper: Treasure Islands, Real Jobs? Workers and Anti-Avoidance Policies in a Tax Paradise (2025)
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Persistent link: https://EconPapers.repec.org/RePEc:ptu:wpaper:w202416

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