Theory suggests that large firms are more likely to engage in lobbying behaviour and are geographically more mobile than smaller entities. Conditional on jurisdiction size, policy choices are thus predicted to depend on the shape of a jurisdiction’s firm size distribution, with more business-oriented policies being enacted if jurisdictions host large firms. The paper empirically tests this prediction using local business taxation in Germany as a testing ground. Exploiting rich and exogenous variation in localities’ firm size structures, we find evidence for an inverse relationship between the size of hosted entities and communities’ local business tax choices. The effect is statistically significant and quantitatively relevant, suggesting that the rising importance of large businesses may trigger shifts towards a more business-friendly design of (tax) policies.
Read StudyCategories
- Employment
- Economy
- Public Finance
- Regulation
- Cost of Living
- Business Climate
- Income
- Energy
- Wages
- Housing
- Indicators
- Education
- Infrastructure
- Demographics
- Unemployment
- Green Jobs
- Business Migration
- Firms
- Uncategorized
- Sales
- Trade
- Legal Climate
- Economic Development
- Health Care
- Projections
- Economic Impact
- Job Growth
- Transportation
- Manufacturing
- Job Trends
- Government
- Population
- Leisure and Hospitality
- Tourism
- Other Services
- Professional, Scientific & Technical Skills
- Legislation
- Information
- National
- Street Insider
- Transportation & Warehousing
- Occupations
Industries
- Economy
- Government
- Manufacturing
- Utilities
- Information
- Construction
- Trade
- Transportation
- Retail
- Warehousing
- Healthcare & Social Assistance
- Accommodation & Food Services
- Mining
- Agriculture, Forestry, Fishing & Hunting
- Education and Health
- Forestry
- Transportation & Warehousing
- Hunting
- Fishing
- Agriculture
- Financial Activities
- Finance & Insurance
- Leisure and Hospitality
- Professional and Business Services
- Social Assistance
- Health Care
- Wholesale Trade
- Educational Services
- Other Services
- Natural Resources
- Arts, Entertainment, & Recreation
- Professional, Scientific, & Technical Skills
- Farming
- Administration
- Support
- Waste Management
- Remediation
- Real Estate & Rental & Leasing