Tax benefits and inequality in the Amazon

Bernardo Perrotti, Daniel Da Mata and Enlinson Mattos

No wp-2026-85, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: Place-based tax incentives are widely used to address regional inequality and are routinely justified on equity grounds. Yet, their consequences for the distribution of pay within targeted firms remain largely unexplored, despite the first-order relevance of firm pay policies in shaping aggregate earnings inequality. We explore the rollout of a large federal corporate income tax benefit granted to plants operating in the Brazilian Amazon to study how tax incentives reshape within-plant wage inequality, the skill composition of employment, and R&D activity.

Keywords: Tax benefits; Corporate income tax; Earnings inequality; Industrial policy (search for similar items in EconPapers)
Date: 2026
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