Do Place-Based Tax Incentives Create Jobs? / Hyejin Ku, Uta Schönberg, Ragnhild C. Schreiner.

Format:

Book

Author/Creator:

Ku, Hyejin.

Contributor:

National Bureau of Economic Research.

Schönberg, Uta.

Schreiner, Ragnhild C.

Series:

Working Paper Series (National Bureau of Economic Research) no. w25115.

NBER working paper series no. w25115

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2018.

Summary:

In this paper, we evaluate the effectiveness of place-based payroll taxes in stimulating local employment by exploiting a unique policy setting in Norway, where a system of geographically differentiated payroll taxes was suddenly abolished due to an EU regulation. The reform was enforced independently of the regional labor market developments, creating arguably exogenous variation in the payroll tax rates that firms in different local labor markets faced over time. We find evidence of partial shifting of payroll tax increases on to worker wages as well as a significant decline in local employment. These findings suggest that in settings with some degrees of wage rigidity, place-based payroll tax incentives can be effective in stimulating local employment.

Notes:

Print version record

September 2018.