Abstract: This paper explores the effects of a federal law that obligates previously unregulated municipalities in Germany to set a minimum tax rate on firms’ taxable profits. In particular, we examine the tax-policy response of municipalities that compete locally with “tax-haven municipalities”, i.e.municipalities that originally have set lower and, in some cases, even zero tax rates. The analysis distinguishes treated and not-treated municipalities based on their distance to a tax-haven. Our results show that the majority of municipalities do not change their tax policy. Apart from the tax-havens, only high-tax municipalities show a response – they reduce the business tax rate without experiencing a decline in tax revenues.
Abstract: This paper examines how Poland’s integration into the European Union (EU) affected its domestic labor market by granting Polish workers access to employment opportunities in the EU. I apply a spatial difference-in-differences approach using Polish municipal-level data to investigate the effects of newly available cross-border employment opportunities in Germany. The analysis distinguishes three separate steps in the delayed integration process and evaluates their consequences. The results indicate strong negative effects of the gradual removal of mobility restrictions on employment in Polish border regions. Remarkably, the strongest effects on employment materialized before full integration was achieved and employment options were still formally restricted. Unemployment, in contrast, declined only after all transitional restrictions on cross-border labor mobility were lifted in 2011.
Abstract: This paper examines the effects of the labor market integration of Germany and Poland on the German labor market. I investigate the European Union (EU) enlargement in 2004 to quantify the effects on employment and wages of resident workers in German border municipalities following the reduction in cross-border transaction cost. The analysis includes the full timeline of the integration process by investigating three key integration steps and different time horizons using a spatial difference-in-differences approach. The findings indicate a decline in native workers' employment and wages after 2004, attributed to the substitution of dependent employment with self-employment and informal work. The end of the transitional restrictions in 2011 leads to an additional displacement of resident workers by Polish workers, spurring further decline in native employment. In the long run, there is a positive effect on wages that offsets the initial decrease.
Capital Mobility and Taxation