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Do Agglomeration Economies Reduce the Sensitivity of Firm Location to Tax Differentials?

Brülhart, Marius and Jametti, Mario and Schmidheiny, Kurt. (2012) Do Agglomeration Economies Reduce the Sensitivity of Firm Location to Tax Differentials? The economic journal, 122 , No. 563. pp. 1060-1093.

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Official URL: http://edoc.unibas.ch/dok/A6070727

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Abstract

Recent theoretical work in economic geography has shown that agglomeration forces can mitigaterace-to-the-bottom tax competition, by partly or fully offsetting firms sensitivity to tax differentials.We test this proposition using data on firm births across Swiss municipalities. We find that corporatetaxes deter firm births less in more spatially concentrated sectors. Firms in sectors with an agglomerationintensity in the top quintile are less than half as responsive to differences in corporate taxburdens as firms in sectors with an agglomeration intensity in the bottom quintile. Hence,agglomeration economies do appear to attenuate the impact of tax differentials on firms locationchoices.
Faculties and Departments:06 Faculty of Business and Economics > Departement Wirtschaftswissenschaften > Professuren Wirtschaftswissenschaften > Angewandte Ökonometrie (Schmidheiny)
UniBasel Contributors:Schmidheiny, Kurt
Item Type:Article, refereed
Article Subtype:Research Article
Bibsysno:Link to catalogue
Publisher:Blackwell
ISSN:0013-0133
Note:Publication type according to Uni Basel Research Database: Journal article
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Last Modified:11 Mar 2016 09:19
Deposited On:01 Mar 2013 11:10

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