Arbeitspapier

Investment Tax Credits and the Response of Firms

This paper estimates the direct effects of investment tax credits on firms' production behavior and the additional indirect effects arising from agglomeration economies. Exploiting a change in tax credit rates by firm size in Germany, I find that manufacturing firms increase capital and employment, with labor demand in information and communication technology-intensive industries shifting towards college-educated workers. Using geolocation data, I show that agglomeration benefits lead to a sizable further firm production expansion with these benefits materializing within distances of 5 kilometers. Worker flows from the service sector and from non-employment, rather than between manufacturing firms, explain the employment effects.

Sprache
Englisch

Erschienen in
Series: IZA Discussion Papers ; No. 15668

Klassifikation
Wirtschaft
Firm Behavior: Empirical Analysis
Business Taxes and Subsidies including sales and value-added (VAT)
Fiscal Policies and Behavior of Economic Agents: Firm
Labor Demand
Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
Thema
investment tax incentives
capital
labor demand
agglomeration

Ereignis
Geistige Schöpfung
(wer)
Lerche, Adrian
Ereignis
Veröffentlichung
(wer)
Institute of Labor Economics (IZA)
(wo)
Bonn
(wann)
2022

Handle
Letzte Aktualisierung
10.03.2025, 11:43 MEZ

Datenpartner

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Objekttyp

  • Arbeitspapier

Beteiligte

  • Lerche, Adrian
  • Institute of Labor Economics (IZA)

Entstanden

  • 2022

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