Tuesday 11
Session Banque de France on The Incidence of Corporate Taxation - Clément Malgouyres
Clément Malgouyres
› 14:00 - 14:30 (30min)
› 401
Do Higher Corporate Taxes Reduce Wages? Micro Evidence from Germany
Clemens Fuest  1@  , Andreas Peichl  2@  , Sebastian Siegloch  3, *@  
1 : ifo Institut – Leibniz-Institut für Wirtschaftsforschung an der Universität München e.V.  (ifo Institut)
2 : Centre for European Economic Research  (ZEW Mannheim)
3 : University of Mannheim
* : Corresponding author

This paper estimates the incidence of corporate taxes on wages using a 20-year panel of German municipalities. Administrative linked employer-employee data allows estimating heterogeneous firm and worker effects. We set up a general theoretical framework showing that corporate taxes can have a negative effect on wages in various labor market models. Using event study designs and differences-in-dfferences models, we test the theoretical predictions. Our results indicate thatworkers in liable firms bear about 47% of the total tax burden. Empirically, we confirm the importance of labor market institutions and profit shifting possibilities for the incidence of corporate taxes on wages.

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