In:
The World Economy, Wiley, Vol. 32, No. 9 ( 2009-09), p. 1319-1347
Abstract:
This paper analyses the impact of corporate taxes on structural unemployment, using an applied general equilibrium model for the European Union. We find that the unemployment and welfare effects of corporate taxes differ considerably among European countries. The magnitude of these effects rises in particular in the broadness of the corporate tax base of a country, and the strength of international spillover effects through foreign direct investment. The effect on unemployment is smaller if the substitution elasticity between labour and capital is large, if international spillover effects operate primarily via multinational profit shifting, and with small labour market imperfections. Although the effect of corporate taxes on unemployment may be smaller than the effect of labour and value‐added taxes (e.g. under relatively strong real wage resistance), the welfare costs of corporate taxation are typically larger for most European countries under plausible parameters, especially under strong international spillovers.
Type of Medium:
Online Resource
ISSN:
0378-5920
,
1467-9701
DOI:
10.1111/twec.2009.32.issue-9
DOI:
10.1111/j.1467-9701.2009.01211.x
Language:
English
Publisher:
Wiley
Publication Date:
2009
detail.hit.zdb_id:
132896-7
detail.hit.zdb_id:
1473825-9
detail.hit.zdb_id:
1285850-X
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