Document Type

Thesis or dissertation

Date of this Version

2021

Advisor

Daniel G. Garrett

Abstract

In January 2012, the Puerto Rican government created Acts 20 and 22, the Export Services and Individual Investors Acts, which respectively grant preferential tax treatment to export-oriented service firms and to individual investors who relocate to Puerto Rico. This paper uses data from the Quarterly Census of Employment and Wages and synthetic difference-in-differences to evaluate their impact on employment, establishments, and wages. It fails to find evidence suggesting that they had an impact on employment beyond 2012. However, it finds evidence that Acts 20 and 22 successfully incentivized the professional, scientific, and technical services industry. By 2015, the year in which the policies’ impact on the service sector peaked, they increased employment by 23.1% and wages by 19.7%. While the point estimates suggest that the policies successfully incentivized the service industry, they do not suggest more than a minimal impact on overall economic activity.

Keywords

Puerto Rico, tax policy, tax incentives, fiscal policy, synthetic controls, difference-in-differences, synthetic difference-in-differences, inverse probability of treatment weighting

Additional Files

AEFIPR2022.zip (35811 kB)

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Date Posted: 28 January 2022

 

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