Arbeitspapier
Do governments tax agglomeration rents?
Using the German local business tax as a testing ground, we empirically investigate the impact of firm agglomeration on municipal tax setting behavior. The analysis exploits a rich data source on the population of German firms to construct detailed measures for the communities' agglomeration characteristics. The findings indicate that urbanization and localization economies exert a positive impact on the jurisdictional tax rate choice which confirms predictions of the theoretical New Economic Geography (NEG) literature. Further analysis suggests a qualification of the NEG argument by showing that a municipality's potential to tax agglomeration rents depends on its firm and industry agglomeration relative to neighboring communities. To account for potential endogeneity problems, our analysis exploits long-lagged population and infrastructure variables as instruments for the agglomeration measures.
- Language
-
Englisch
- Bibliographic citation
-
Series: CESifo Working Paper ; No. 2976
- Classification
-
Wirtschaft
State and Local Government; Intergovernmental Relations: Interjurisdictional Differentials and Their Effects
Size and Spatial Distributions of Regional Economic Activity
- Subject
-
agglomeration rents
corporate taxation
regional differentiation
Gemeindesteuer
Gewerbesteuer
Steuertarif
Agglomerationseffekt
Regionale Konzentration
Lokalisationseffekt
Deutschland
- Event
-
Geistige Schöpfung
- (who)
-
Koh, Hyun-Ju
Riedel, Nadine
- Event
-
Veröffentlichung
- (who)
-
Center for Economic Studies and ifo Institute (CESifo)
- (where)
-
Munich
- (when)
-
2010
- Handle
- Last update
-
10.03.2025, 11:42 AM CET
Data provider
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Koh, Hyun-Ju
- Riedel, Nadine
- Center for Economic Studies and ifo Institute (CESifo)
Time of origin
- 2010
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