Who Benefits from State Corporate Tax Cuts? A Local Labor Markets Approach with Heterogeneous Firms

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Bibliographic Data

ID19067059
AuthorsClément Malgouyres (0000-0002-2711-7669, CNRS-CREST and IPP-PSE (email: ), corresponding author), Thierry Mayer (0000-0003-2098-3887, Sciences Po, CEPII, and CEPR (email: )), Clément Mazet-Sonilhac (0000-0002-4419-4690, Bocconi University, Department of Finance (email: ))
Year2023
Volume113
Issue8
Pages2270-2286
Publication date2023-07-27
Peer ReviewedYes
Open AccessNo
TypeARTICLE
VenueAmerican Economic Review (JOURNAL)
Journal identifiersISSN: 0002-8282 • E-ISSN: 1944-7981
PublisherAmerican Economic Association (PUBLISHER • US)
DOI10.1257/aer.20201753
OpenAlexW3156295346
LanguageEN
Citations received1
References cited10

Suárez Serrato and Zidar (2016) identify state corporate tax incidence in a spatial equilibrium model with imperfectly mobile firms. Their identification argument rests on comparative statics omitting a channel implied by their model: the link between common determinants of a location’s attractiveness and the average idiosyncratic productivity of firms choosing that location. This compositional margin causes the labor demand elasticity to be independent from the product demand elasticity, impeding the identification of incidence from the four estimated reduced-form effects. Assigning consensual values to the unidentified parameters, we find that the incidence share borne by firm owners is closer to 25 percent than 40 percent. (JEL H22, H25, H32, H71, R23, R51)

Attractiveness · Comparative statics · Corporate Tax · Econometrics · Economics · Indirect tax · Microeconomics · Price elasticity of demand · Public economics · Tax avoidance · Tax credit · Tax incidence · Tax reform · Corporate Taxation and Avoidance · Economic Policies and Impacts · Fiscal Policy and Economic Growth

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