Corporate taxation and productivity catch-up: evidence from European firms

Gemmell, Norman and Kneller, Richard and McGowan, Danny and Sanz, Ismael and Sanz-Sanz, José F. (2016) Corporate taxation and productivity catch-up: evidence from European firms. Scandinavian Journal of Economics . ISSN 1467-9442

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Abstract

This paper explores whether higher corporate tax rates reduce the speed with which small firms converge to the productivity frontier by lowering the after-tax returns to productivity-enhancing investments. Using data for 11 European countries we find evidence that their productivity catch-up is slower the higher are statutory corporate tax rates. In contrast, we find large firms are instead affected by effective marginal rates. Using the reduced form model of productivity convergence due to Griffith et al. (2009) our results are robust to a host of robustness checks and a natural experiment that exploits the 2001 German tax reforms.

Item Type: Article
Additional Information: This is the peer reviewed version of the following article: Gemmell, N., Kneller, R., McGowan, D., Sanz, I. and Sanz-Sanz, J. F. (2016), Corporate Taxation and Productivity Catch-Up: Evidence from European Firms*. Scandinavian Journal of Economics. doi:10.1111/sjoe.12212, which has been published in final form at: http://onlinelibrary.wiley.com/doi/10.1111/sjoe.12212/abstract. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Self-Archiving.
Keywords: Productivity; taxation; convergence
Schools/Departments: University of Nottingham UK Campus > Faculty of Social Sciences > Nottingham University Business School
University of Nottingham UK Campus > Faculty of Social Sciences > School of Economics
Identification Number: https://doi.org/10.1111/sjoe.12212
Depositing User: Eprints, Support
Date Deposited: 21 May 2016 10:38
Last Modified: 26 Sep 2016 03:10
URI: http://eprints.nottingham.ac.uk/id/eprint/32941

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