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Assessing the effects of local taxation using microgeographic data

By Gilles Duranton, Laurent Gobillon and Henry G. 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

Topics: HJ Public Finance
Publisher: Wiley on behalf of the Royal Economic Society
Year: 2011
DOI identifier: 10.1111/j.1468-0297.2011.02439.x
OAI identifier: oai:eprints.lse.ac.uk:41367
Provided by: LSE Research Online

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