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Title: Essays on Macroeconomic Implications of Fiscal Federalism
Citation Type: Dissertation/Thesis
Publication Year: 2025
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Abstract: This thesis consists of three essays that explore the direct and indirect implications of fiscal decentralization for firm relocations, labor mobility, and discretionary fiscal policies. The first chapter, “Taxed Out? How Early 20th Century Regional Tax Adoptions Shaped Interstate Firm Relocations”, estimates the causal effects of decentralized regional tax adoptions on firm relocations within the borders of a country. I rely on the unique historical setting of staggered and uncoordinated introductions of 16 state-level corporate income taxes in the early 20th century U.S. as a natural experiment. I use linked census data on employers and a gravity model to estimate interstate firm relocation responses to these tax adoptions. This framework allows me to account for the entire universe of time-varying location factors beyond taxation. With that, I quantify a 13.02% increase in firm flows between two states when the origin state adopts a corporate income tax of 2.5% on average. Heterogeneity in the introduced rates further allows to estimate the flow elasticity concerning a 1 ppt higher adopted rate to be 4.75%. The effects vary across sectors, finding that the main results are driven by manufacturing, mercantile, and service businesses.
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Authors: Smutny, Stefan
Institution: University Wien
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Pages: 1-195
Data Collections: IPUMS USA - Ancestry Full Count Data
Topics: Labor Force and Occupational Structure
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