Replication data for: Corporate Income Tax, Legal Form of Organization, and Employment
Principal Investigator(s): View help for Principal Investigator(s) Daphne Chen; Shi Qi; Don Schlagenhauf
Version: View help for Version V1
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Project Citation:
Chen, Daphne, Qi, Shi, and Schlagenhauf, Don. Replication data for: Corporate Income Tax, Legal Form of Organization, and Employment. Nashville, TN: American Economic Association [publisher], 2018. Ann Arbor, MI: Inter-university Consortium for Political and Social Research [distributor], 2019-10-12. https://doi.org/10.3886/E114094V1
Project Description
Summary:
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A dynamic stochastic occupational choice model with heterogeneous agents is developed to evaluate the impact of a corporate income tax reduction on employment. In this framework, the key margin is the endogenous entrepreneurial choice of legal form of organization. A reduction in the corporate income tax burden encourages adoption of the C corporation legal form, which reduces capital constraints on firms. Improved capital reallocation increases overall productive efficiency in the economy and therefore expands the labor market. Relative to the benchmark economy, a corporate income tax cut can reduce the non-employment rate by up to 7 percent.
Scope of Project
JEL Classification:
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E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
H25 Business Taxes and Subsidies including sales and value-added (VAT)
H32 Fiscal Policies and Behavior of Economic Agents: Firm
J23 Labor Demand
J24 Human Capital; Skills; Occupational Choice; Labor Productivity
E24 Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
H25 Business Taxes and Subsidies including sales and value-added (VAT)
H32 Fiscal Policies and Behavior of Economic Agents: Firm
J23 Labor Demand
J24 Human Capital; Skills; Occupational Choice; Labor Productivity
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