Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/168394
Authors: 
Belotti, Federico
Di Porto, Edoardo
Santoni, Gianluca
Year of Publication: 
2016
Series/Report no.: 
Working Paper 2016:3
Abstract: 
This paper studies the impact of municipal non-residential property taxation on firms' performance using a panel data of italian manufacturing firms in 2001-2010. In the spirit of Duranton et al. (2011), we use a pairwise spatial difference instrumental variable estimator which allows to tackle the endogeneity of local taxation. As well as providing robust inference to arbitrary cross-sectional dependence and serial correlation, our empirical strategy also improves on existing work by exploiting the exogenous variation in local taxes generated by the political alignment of each jurisdiction with the central government. We find that non-residential property taxation exert a negative impact on firms' employment, capital and sales to such an extent as to significantly affect total factor productivity.
Subjects: 
Local taxation
endogeneity
spatial differencing
generalized method of moments
two-way clustering
JEL: 
H22
H71
R38
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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