Journal Article

Killing a second bird with one stone? Promoting firm capital growth and exports through tax policy

Michele Bernini and Tania Treibich

in Industrial and Corporate Change

Volume 25, issue 5, pages 829-845
Published in print October 2016 | ISSN: 0960-6491
Published online September 2016 | e-ISSN: 1464-3650 | DOI: https://dx.doi.org/10.1093/icc/dtw029
Killing a second bird with one stone? Promoting firm capital growth and exports through tax policy

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  • Single Equation Models; Single Variables
  • International Trade
  • Taxation, Subsidies, and Revenue
  • Production and Organizations

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Does a lower tax rate on profits promote the international activity of small and medium enterprises? This article addresses this question by exploiting a policy experiment in France. A reduction in corporate taxation is found to boost small and medium enterprises’ capital growth and export participation, but to reduce employment growth. We estimate that a 50% reduction in the statutory tax rate induces, on average, a 29% increase in capital and a 6% increase in individual firms’ probability of exporting. However, the estimated average treatment effect on the treated conceals substantial heterogeneity across firms with different initial productivity and size.

Keywords: C21; C26; F14; H25; D24

Journal Article.  9478 words.  Illustrated.

Subjects: Single Equation Models; Single Variables ; International Trade ; Taxation, Subsidies, and Revenue ; Production and Organizations

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