Capital Investment and Labor Demand / E. Mark Curtis, Daniel G. Garrett, Eric C. Ohrn, Kevin A. Roberts, Juan Carlos Suárez Serrato.

Format:

Book

Author/Creator:

Curtis, E. Mark.

Contributor:

National Bureau of Economic Research.

Garrett, Daniel G.

Ohrn, Eric C.

Roberts, Kevin A.

Suárez Serrato, Juan Carlos.

Series:

Working Paper Series (National Bureau of Economic Research) no. w29485.

NBER working paper series no. w29485

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2021.

Summary:

We study how tax policies that lower the cost of capital impact investment and labor demand. Difference-in-differences estimates using confidential Census Data on manufacturing establishments show that tax policies increased both investment and employment, but did not stimulate wage or productivity growth. Using a structural model, we find that the primary effect of the policy was to increase the use of all inputs by lowering costs of production and that capital and production workers are complementary inputs in modern manufacturing. Our results show that tax policies that incentivize capital investment do not lead manufacturing plants to replace workers with machines.

Notes:

Print version record

November 2021.