Assessing the Effects of Local Taxation Using Microgeographic Data

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Real Estate Papers
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local taxation
spatial differencing
borders
Economics
Real Estate
Taxation
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Duranton, Gilles
Gobillon, Laurent
Overman, Henry G
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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.

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2011-09-01
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The Economic Journal
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At the time of publication, author Gilles Duranton was affiliated with the University of Toronto. Currently, he is a faculty member at the Real Estate Department at the University of Pennsylvania.
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