Working Papers
Working Papers
Hotelling Meets Laffer - Taxation and the Discovery of Exhaustible Resources
New version available soon
Many resource-rich countries have raised tax rates on mining activity over the past two decades, amid surging demand for minerals. Using a global firm-level panel of mining exploration and production from 1997 to 2024, combined with a newly compiled dataset of statutory tax rates, I find that higher taxes leave production from existing mines unchanged but sharply reduce exploration: a one-percentage-point increase in sales royalties lowers exploration expenditures by 5 to 7 percent, with no significant effect on short-run output. Event studies around the four largest mining tax reforms of the past two decades - South Africa (2010), Ghana (2012), Mexico (2014), and the DRC (2018) - confirm this result. Affected firms gradually relocate exploration abroad, leaving global exploration unchanged in the long run. These findings document a time-inconsistency problem in resource taxation: governments can capture short-run rents from immobile production but erode their long-run tax base by deterring discovery. Quantifying this trade-off, I find that mature mining countries can sustain substantially higher tax rates than frontier countries, where exploration is still defining future production.
The Global Allocation of Extractive Windfalls, with Ninon Moreau-Kastler
Coverage: New York Times, Le Monde, Editorial in Le Monde, Tax Notes, Ouest France, Libération, Le Soir, Marianne, L'Humanité, L'Express, La Croix, IGC Tax Talks, IGC Policy Brief, France Culture
The extraction of oil, gas, and minerals generates large economic rents, yet it remains unknown how commodity price windfalls are distributed across the global networks of multinational enterprises (MNEs) that dominate production in most resource-rich countries. We study this question by combining administrative records covering the worldwide profits, revenues, and employees of large MNEs across all jurisdictions, with comprehensive data on their physical extraction activity at the affiliate level. Extractive MNEs have a substantial presence in countries in which they do not extract: downstream and consumption countries, as well as low-tax jurisdictions. Combining differences in firms' commodity specialization with heterogeneous market price changes in a shift-share design, we find that windfall profits are partly diverted to low-tax jurisdictions. For every additional dollar of consolidated windfall profit, $0.8 accrues to extractive affiliates, $0.2 to tax havens, and nothing to the rest of the group. This diversion intensifies during booms: the share of profits booked in tax havens rises by one percentage point for every 10% increase in group profitability.
Shift or Share? Profit Shifting and Workers' Profit-Sharing, with Manon François, Laure Heidmann, and Giulia Aliprandi
Coverage: VoxTalks, Agence France Presse, Ouest France, RTL Luxembourg, Challenges
This paper quantifies how profit shifting erodes workers' earnings through mandatory profit-sharing. We combine Country-by-Country Reports with French employer-employee data to build a credible counterfactual profit allocation. We estimate that large French multinationals shift 19% of foreign profits annually to low-tax jurisdictions, a finding robust across a wide range of methodologies and estimation approaches. Employees in outward-shifting subsidiaries are estimated to receive between one-third and one-half less in profit-sharing than they would absent profit shifting, equivalent to 1.8-2.8\% of net wages. The pattern is regressive: bottom-decile workers lose 3.3% of net wages against 2.3% for top-decile workers.