Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

Corporate taxes and the demand for labor and capital in developing countries

Corporate taxes and the demand for labor and capital in developing countries This article provides evidence about the impact of corporate taxation on both labor and capital demand by private companies in a developing economy, using firm level data from Chile. Our results show that higher corporate tax rates reduce not only the demand for capital, but also the demand for labor due to complementarities between both inputs. An interesting element of the results presented in this article is the asymmetry between the effects of taxation according to company size. The impact on labor demand is significantly higher in large corporations than in small enterprises, while the demand for capital is more responsive to corporate tax changes in small firms. We can explain these results based on differences in credit constraints according to firm size. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Small Business Economics Springer Journals

Corporate taxes and the demand for labor and capital in developing countries

Cerda, Rodrigo; Larrain, Felipe
Small Business Economics , Volume 34 (2) – Apr 23, 2008
Download PDF
15 pages

Loading next page...
 
/lp/springer_journal/corporate-taxes-and-the-demand-for-labor-and-capital-in-developing-vbweJBAEID

References (20)

Publisher
Springer Journals
Copyright
Copyright © 2008 by Springer Science+Business Media, LLC.
Subject
Business and Management; Management; Microeconomics; Entrepreneurship; Industrial Organization
ISSN
0921-898X
eISSN
1573-0913
DOI
10.1007/s11187-008-9113-2
Publisher site
See Article on Publisher Site

Abstract

This article provides evidence about the impact of corporate taxation on both labor and capital demand by private companies in a developing economy, using firm level data from Chile. Our results show that higher corporate tax rates reduce not only the demand for capital, but also the demand for labor due to complementarities between both inputs. An interesting element of the results presented in this article is the asymmetry between the effects of taxation according to company size. The impact on labor demand is significantly higher in large corporations than in small enterprises, while the demand for capital is more responsive to corporate tax changes in small firms. We can explain these results based on differences in credit constraints according to firm size.

Journal

Small Business Economics – Springer Journals

Published: Apr 23, 2008

There are no references for this article.