Microeconometrics Seminar: Every Tuesday
Time: 3:00 pm – 4:15 pm
Date: 7th of September 2021
Room :
Juan Carlos SUAREZ SERRATO (Duke University) – “Capital Investment and Labor Demand:Evidence from 21st Century Tax Policy ”

Abstract: We study how tax policies that lower the cost of capital impact investment and labor demand. Difference-in-differences estimates using confidential US Census Data on manufacturing establishments show that tax policies increased both investment and employment, but did not lead to wage or productivity gains. Using a structural model to disentangle scale and substitution effects, we find that capital and labor are complements in production. Supporting this conclusion, we find that investment is greater in plants with lower labor costs. Our results show that recent tax policies that incentivize capital investment do not lead manufacturing plants to replace workers with machines.

Organizers:
Benoît SCHMUTZ (Pôle d’économie du CREST)
Anthony STRITTMATTER (Pôle d’économie du CREST)

Sponsors:
CREST