Our model replicates the main features of the labor market, including the distribution of firms and employment by firm size and age, and the response of each type of firm to a corporate tax increase. [...] Situated on the opposite side of the state border The first two conditions state that the control county is co-contiguous to the treated county, with the contiguous border county between them. [...] The government budget is balanced with lump-sum transfers T: T = FS (27) 4.7 Equilibrium As in Elsby and Michaels (2013), the condition for the aggregate steady-state equilib- rium is obtained by determining the mass of workers and the job-finding probabilities such that the number of matches equals the number of separations. [...] 28 The objective is to replicate the following moments: (A) The share of firms by firm size and age (B) The share of employment by firm size and age (C) The job creation rate, job destruction rate, and exit rate by firm size and age (D) The elasticity of employment with respect to the corporate tax by firm size and age For moments (A) to (C), we have 4 size groups (1-19 , 20-99, 100-499, 500+ empl. [...] The optimization procedure consists of finding the vector of parameters Θ that min- imizes the distance between the vector of moments simulated from the model Mm(Θ) and the vector of moments from the data Md.
- Pages
- 91
- Published in
- France
Table of Contents
- Julien Albertini Xavier Fairise Anthony Terriau 2
- September 18 2024 2
- 1 Introduction 3
- 2 Empirical framework 6
- 2.1 State corporate income tax 6
- 2.2 Empirical strategy 6
- 2.3 Data 6
- 2.4 Sample 7
- 2.5 Effect of corporate taxation on employment 9
- 2.6 Heterogeneous effects by firm size and age 11
- 2.7 Robustness tests 12
- 3 Toy model Understanding the differentiated effects of 15
- 4 Model 18
- 4.1 Heterogeneity 18
- 4.2 Search and matching 19
- 4.3 Value functions 20
- 4.4 Entry and exit 24
- 4.5 Stationary distribution 25
- 4.6 Government budget 26
- 4.7 Equilibrium 26
- 5 Quantitative analysis 28
- 5.1 Functional forms 28
- 5.2 Calibration and estimation 28
- 5.3 Simulation 33
- 5.4 Change in the corporate tax rate 33
- 5.5 State-dependent optimal taxation 37
- 6 Conclusion 43
- References 44
- Appendix 47
- A Data description 47
- A.1 Sample 47
- A.2 Business Dynamics Statistics BDS 47
- A.3 Book of the States 49
- A.4 Population Estimates Program PEP 49
- B Number of firms and employment by firm size and age 51
- C Descriptive statistics by state 52
- D A simple two-periods model 53
- D.1 The firm program 54
- D.2 Employment level over the life cycle 57
- D.3 Elasticity with respect to corporate tax 62
- E Simulations 70
- A Full model 73
- B Solution algorithm 75
- B.1 Overview 75
- B.2 State-space 75
- B.3 Algorithm 77
- C Estimation procedure 82
- C.1 Targets 82
- C.2 Estimated parameters 82
- C.3 Minimization problem 82
- C.4 Adaptive grid 83
- C.5 Algorithm 84
- D Optimal policy 85
- D.1 Optimization program 85
- D.2 Welfare 85
- D.3 Algorithm 87
- E Supplementary simulations 89
