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Do Firms Move? An Estimation of Local Labor Demand Elasticity

Massachusetts Institute of Technology - CAMBRIDGE, MASSACHUSETTS - 2019

This project aims to measure the elasticity of local labour demand by investigating variations in social security contributions and income taxes within zones established during implementation of the ZFU (Urban Tax-Free Zones) policy. This business zone program grants tax exemptions to companies located in certain disadvantaged urban districts. The impact on employment and wages of these changes in taxation, combined with a structural model, makes it possible to identify both the elasticity of local labour demand and that of local labour supply.