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Assessing the Effects of Local Taxation Using Microgeographic Data

Author

Listed:
  • Gilles Duranton
  • Laurent Gobillon
  • Henry Overman
Abstract
We study the impact of local taxation on the location and growth of firms. Our empirical methodology pairs establishments across jurisdictional boundaries to estimate the impact of taxation. Our approach improves on existing work as it corrects for unobserved establishment heterogeneity, for unobserved time-varying site specific effects, and for the endogeneity of local taxation. Applied to data for English manufacturing establishments we find that local taxation has a negative impact on employment growth, but no effect on entry.

Suggested Citation

  • Gilles Duranton & Laurent Gobillon & Henry Overman, 2006. "Assessing the Effects of Local Taxation Using Microgeographic Data," CEP Discussion Papers dp0748, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:cepdps:dp0748
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Local taxation; spatial differencing; borders;
    All these keywords.

    JEL classification:

    • H22 - Public Economics - - Taxation, Subsidies, and Revenue - - - Incidence
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • R38 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Government Policy

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