Working Paper: CEPR ID: DP13105
Authors: Jozef Konings; Cathy Lecocq; Bruno Merlevede
Abstract: We analyze the impact of a tax credit on jobs in multinational enterprises. In particular, we exploit the introduction of the ‘notional interest deduction’ regime in Belgium in 2006, an ‘allowance for corporate equity’, which aimed to provide an attractive tax system for multinational enterprises active in Belgium. We study employment growth in foreign affiliates of MNEs in Belgium and use as a control group the affiliates of the same MNEs in France. We find that the tax credit has increased employment in Belgian affiliates by 6 to 8 percent over the period 2006-2008.
Keywords: Foreign Direct Investment; Multinational Enterprises; Tax Policy; Employment
JEL Codes: F21; F23; H25
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Notional Interest Deduction (NID) (H20) | Employment in Belgian affiliates (M51) |
| Notional Interest Deduction (NID) (H20) | Employment growth in Belgian affiliates (F29) |
| Employment in Belgian affiliates (M51) | Employment growth in Belgian affiliates (F29) |
| Employment growth in Belgian affiliates (F29) | Employment in Belgian affiliates (M51) |