Tax Policy and Local Labor Market Behavior / Daniel G. Garrett, Eric C. Ohrn, Juan Carlos Suárez Serrato.

Format:

Book

Author/Creator:

Garrett, Daniel G.

Contributor:

National Bureau of Economic Research.

Ohrn, Eric C.

Suárez Serrato, Juan Carlos.

Series:

Working Paper Series (National Bureau of Economic Research) no. w25546.

NBER working paper series no. w25546

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2019.

Summary:

Since 2002, the US government has encouraged business investment using accelerated depreciation policies that significantly reduce investment costs. We provide the first in-depth analysis of this stimulus on employment and earnings. Our local labor markets approach exploits cross-industry differences in policy generosity interacted with county-level variation in industry concentration. Places that experience larger decreases in investment costs see a level increase in employment that implies a $53,000 cost-per-job. We find no positive effects on average earnings. In contrast, we document a persistent growth in capital. These results imply a capital-labor substitution elasticity that grows over time and can exceed unity.

Notes:

Print version record

February 2019.