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Does Corporate Taxation Deter Multinationals? Evidence from a Historic Event in Ireland
Author(s) -
Görg Holger,
Strobl Eric
Publication year - 2015
Publication title -
the world economy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.594
H-Index - 68
eISSN - 1467-9701
pISSN - 0378-5920
DOI - 10.1111/twec.12240
Subject(s) - corporate tax , margin (machine learning) , german , foreign direct investment , international economics , monetary economics , economics , panel data , investment (military) , business , multinational corporation , double taxation , tax avoidance , international trade , public economics , macroeconomics , finance , political science , geography , archaeology , machine learning , politics , computer science , law , econometrics
We use a unique exogenous corporate tax policy change in the Republic of Ireland to investigate how corporate taxation affects foreign direct investment at the extensive and intensive margin. To this end, we construct exhaustive sectoral and plant level panel data and use difference‐in‐differences strategies. Our results do not provide strong evidence that the increase in corporate tax rates for exporters did affect the entry or exit of plants from the US or UK in Ireland. Entry rates of German firms seem to be negatively affected, however. At the intensive margin, there is evidence that foreign plants in Ireland reduce the size of their operations in response to the tax change.