2014

Labor Taxation and FDI Decisions in the European Union

Reprint No. 2014:17

Author(s): Åsa Hansson and Karin OlofsdotterYear: 2014 Title: Open Economies Review Volume (No.): 25 (2) Pages: 263–287
Online article (restrictions may apply)


This paper uses panel data on bilateral FDI stocks in the European Union to empirically analyze the impact of labor and corporate taxations on FDI decisions. While the effect of corporate taxes on FDI is well documented, the impact of labor taxes on FDI has barely been explored. This is surprising since labor taxation may influence FDI as well; the taxation of labor affects the production cost and the ability to attract and retain productive labor, and thereby it also, ultimately, impacts the return to the investment. By employing a Heckman two-step estimation model, which controls for possible sample selection bias due to many zero bilateral observations, we find that labor taxes do influence FDI decisions.


Reference:
Hansson, Åsa and Karin Olofsdotter (2014), "Labor Taxation and FDI Decisions in the European Union". Open Economies Review 25(2), 263–287.

Åsa Hansson

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Integrating Immigrants into the Nordic Labour Markets

An Overall Perspective

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Denmark, Finland, Norway and Sweden face similar problems of integrating large groups of immigrants, especially low-educated ones from outside the EU, into their labour markets. In this volume, edited by Lars Calmfors, IFN, and Nora Sánchez Gassen in cooperation with researchers from across the Nordic Region analyse how labour market integration of immigrants can be promoted. 

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