Labor Market Consequences of Anti-Tax Avoidance Policies: Evidence from the UK Worldwide Debt Cap
Early Career Research Grant
I propose to analyze the consequences of multinational firms reallocating employees across their affiliates in response to anti-tax avoidance policies. The UK introduced a worldwide debt cap in 2010, generating a quasi-natural experiment that limited interest deductibility for a group of multinational firms (MNCs). Bilicka et al (2019) show that multinationals affected by the reform reduced the amount of debt held in the UK and increased debt held abroad. Affected multinationals also reallocated a share of their real operations, including employment, away from the UK. In this paper, I propose to analyze the heterogeneous consequences of this reform for local labor markets where MNCs operate.