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Assessing the Effects of Local Taxation Using Microgeographic Data

CEPR Discussion Paper No. 5856

43 Pages Posted: 20 Dec 2006

See all articles by Gilles Duranton

Gilles Duranton

London School of Economics & Political Science (LSE) - Department of Geography and Environment; Centre for Economic Policy Research (CEPR)

Laurent Gobillon

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST); National Institute of Demographic Studies (INED)

Henry G. Overman

London School of Economics (LSE) - Department of Geography and Environment; Centre for Economic Policy Research (CEPR)

Date Written: September 2006

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.

Keywords: Local taxation, spatial differencing, borders, regression discontinuity

JEL Classification: H22, H71, R38

Suggested Citation

Duranton, Gilles and Gobillon, Laurent and Overman, Henry G., Assessing the Effects of Local Taxation Using Microgeographic Data (September 2006). CEPR Discussion Paper No. 5856, Available at SSRN: https://ssrn.com/abstract=952769

Gilles Duranton (Contact Author)

London School of Economics & Political Science (LSE) - Department of Geography and Environment ( email )

Houghton Street
London, WC2A 2AE
United Kingdom
+44 20 7955 7604 (Phone)
+44 20 7955 7412 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Laurent Gobillon

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST) ( email )

15 Boulevard Gabriel Peri
Malakoff Cedex, 1 92245
France

National Institute of Demographic Studies (INED) ( email )

133, Boulevard Davout
Paris cedex 20, France 75980
France
+33 1 5606 2016 (Phone)
+33 1 5606 2199 (Fax)

HOME PAGE: http://laurent.gobillon.free.fr/

Henry G. Overman

London School of Economics (LSE) - Department of Geography and Environment ( email )

Houghton Street
London, WC2A 2AE
United Kingdom
+44 20 7955 6581 (Phone)
+44 20 7955 7412 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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