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Do higher corporate taxes reduce wages? Micro evidence from Germany

Clemens Fuest, Andreas Peichl and Sebastian Siegloch

No 16-003, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: This paper estimates the incidence of corporate taxes on wages using a 20-year panel of German municipalities. Administrative linked employer-employee data allows estimating heterogeneous worker and firm effects. We set up a general theoretical framework showing that corporate taxes can have a negative effect on wages in various labor market models. Using an event study design, we test the predictions of the theory. Our results indicate that workers bear about 40% of the total tax burden. Empirically, we confirm the importance of both labor market institutions and profit shifting possibilities for the incidence of corporate taxes on wages.

Keywords: business tax; wage incidence; administrative data; local taxation (search for similar items in EconPapers)
JEL-codes: H2 H7 J3 (search for similar items in EconPapers)
Date: 2016
New Economics Papers: this item is included in nep-acc, nep-eur, nep-law and nep-pbe
Note: This paper is a completely revised version of ZEW Discussion Paper No. 13-039.
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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https://www.econstor.eu/bitstream/10419/125812/1/845399357.pdf (application/pdf)

Related works:
Journal Article: Do Higher Corporate Taxes Reduce Wages? Micro Evidence from Germany (2018) Downloads
Working Paper: Do Higher Corporate Taxes Reduce Wages? Micro Evidence from Germany (2017) Downloads
Working Paper: Do Higher Corporate Taxes Reduce Wages? Micro Evidence from Germany (2013) Downloads
Working Paper: Do Higher Corporate Taxes Reduce Wages? Micro Evidence from Germany (2013) Downloads
Working Paper: Do higher corporate taxes reduce wages? Micro evidence from Germany (2013) Downloads
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