Year: 2015
Author: Festa, Andrea
Applied Economics Quarterly, Vol. 61 (2015), Iss. 1 : pp. 1–23
Abstract
This paper examines the impact of the tax wedge on productivity using firm-level based TFP data for several OECD countries for the period 2000–2008. The identifying assumption is that labour costs influence firm’s behaviour and its productivity, especially in sectors with relatively higher labour intensity. To address this issue, I estimate the productivity function using the Olley-Pakes approach. Then I apply the differences-in-differences approach, which exploits differential effects of the tax wedge on firms with different labour-intensity. This approach has the advantage that it is possible to control for unobserved factors that, on average, are likely to have the same effect on productivity in any sector. The results suggest that the tax wedge has a relatively negative impact on productivity, especially for small-sized firms.
JEL Classification: H3, O47
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Journal Article Details
Publisher Name: Global Science Press
Language: English
DOI: https://doi.org/10.3790/aeq.61.1.1
Applied Economics Quarterly, Vol. 61 (2015), Iss. 1 : pp. 1–23
Published online: 2015-03
AMS Subject Headings: Duncker & Humblot
Copyright: COPYRIGHT: © Global Science Press
Pages: 23
Keywords: TFP differences-in-differences tax wedge