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| Author: | Cerda, R.A. Larrain, F. |
| Title: | Corporate taxes and the demand for labor and capital in developing countries |
| Journal: | Small business economics
2010 : FEB, VOL. 34:2, p. 187-201 |
| Index terms: | South America Chile small business company taxation companies by size labour demand capital |
| Freeterms: | developing economies |
| Language: | eng |
| Abstract: | Using firm level data from Chile, this study provides evidence about the impact of corporate taxation on both labour and capital demand by private companies in a developing economy. The results show that higher corporate tax rates reduce not only the demand for capital, but also the demand for labour due to complementarities btw. both inputs. An interesting element is the asymmetry btw. the effects of taxation according to company size. The impact on labour demand is significantly higher in large corporations than in small companies, while the demand for capital is more responsive to corporate tax changes in small firms. These results can be explained based on differences in credit constraints according to firm size. |
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