Multinationals Sales and Profit Shifting in Tax Havens
with Sébastien Laffitte
Abstract: We show using public macro-level data that U.S. multinational firms record sales and the profit stemming from these sales in tax havens while their goods and services are physically sold in other countries. We propose a parsimonious model which rationalize sales shifting. Our empirical exercise reveals the importance of tax havens which attract a disproportionate fraction of worldwide sales of goods and services given their geography and market access. Our quantification shows that the contribution of sales shifting to the amount of foreign profits that are shifted by U.S. multinationals is large. It amounts to about $80bn in 2013. Our findings suggest that international corporate tax rules based on sales may not efficiently address profit shifting.
Techies, Trade, and Skill-Biased Productivity
Abstract: We study the impact of firm level choices of ICT, R&D, exporting and importing on the evolution of productivity and its bias towards skilled occupations. We use a novel measure of the propensity of a firm to engage in technology investment and adoption: its employment of workers with STEM (science, technology, engineering and math) skills and experience who we call "techies". We develop a methodology for estimating firm level productivity that allows us to measure both Hicks-neutral and skill-augmenting technology differences, and apply this to administrative data on French firms in the entire private sector from 2009 to 2013. We find that techies and importing of intermediate inputs raise skill-biased productivity, while imports also raise Hicks-neutral productivity. We also nd that higher firm-level skill biased productivity raises low-skill employment even as it raises the ratio of skilled to unskilled workers. This is because of the cost-reducing eect of higher productivity. The techie and trade effects are large, and can account for much of the aggregate increase in skilled employment from 2009 to 2013.
The March of Techies: Job Polarization Within and Between Firms
Abstract: Using administrative employee-firm-level data on the entire private sector from 1994 to 2007, we show that the labor market in France has polarized: employment shares of high and low wage occupations grew, while middle wage occupations shrank. At the same time, the share of technology-related occupations ("techies") grew substantially. Aggregate polarization was driven mostly by changes in the composition of firms within industries; in contrast, within-firm adjustments and changes in industry composition are much less important. Polarization occurs mostly within urban areas, with roughly equal contributions of men and women. We study the role of technology adoption in shaping firm-level outcomes using a new measure of the propensity of a firm to adopt new technology: its employment share of techies. We find that techies were an important force driving aggregate polarization in France, as firms with more techies grew faster. This is driven mostly by engineers rather than technicians.
New Version: coming soon