Tax Revenue and Labour Market Challenges of Developing Countries

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Title: Tax Revenue and Labour Market Challenges of Developing Countries
Author: Schimanski, Caroline
Contributor: Svenska handelshögskolan, institutionen för nationalekonomi, nationalekonomi
Hanken School of Economics, Department of Economics, Economics
Belongs to series: Economics and Society – 323
ISSN: 0424-7256 (printed)
2242-699X (PDF)
ISBN: 978-952-232-370-5 (printed)
978-952-232-371-2 (PDF)
Abstract: This doctoral thesis addresses in four articles two broad challenges in the field of development economics. The first two articles aim at providing causal evidence for the existence of systematic profit-shifting by multinational companies (MNCs) with a special focus on shifting out of developing countries as these are claimed to particularly suffer in terms of forgone tax revenue from profit-shifting. The first article re-estimates the results of Dharmapala and Riedel (2013), an influential paper in the literature, using more recent data, expanding its geographic scope and comparing between statutory and effective tax rate incentivized profit-shifting from parent firms to subsidiaries. The second article expands on this by looking into more complex potentially multi-directional profit-shifting flows between any affiliate of the group and other incentivizing factors, apart from lower statutory or effective corporate income tax rates, such as development status, credit rating, corruption and tax haven status of the country. The remaining chapters three and four address labour market challenges in developing countries, whereby the third article still links to the former through the topic of taxation. More specifically, the third article estimates the elasticity of formal work in sub-Saharan Africa, as the transition into formal employment, in economies largely characterized by informal labour markets, is the precondition for domestic resource mobilization from personal income taxes. The fourth article estimates the extent and evolution of race-based labour market segregation and wage inequality in Trinidad and Tobago, in the light of its colonial history characterized by racial segregation.
Date: 2018-11-23
Subject: domestic resource mobilization
multinational companies
racial segregation
racial wage gaps

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