New Insights into the Relationship Between Taxation and Trade

Client/Funding Institution

Anniversary Fund of the Oesterreichische Nationalbank


This project dealed with two questions from the fields of taxation and international trade. The first one revisited the relationship between labour taxation and international trade, focusing on the role of domestic labour value added. The second one refered to the relationship between corporate taxes and international trade, focusing on the role of the multinational enterprises. The project also assessed whether the decline in labour and corporate taxes from the past decades had contributed to the expansion of international trade. The research project used industry level data, for EU and OECD countries, and Two Stage Least Squares estimator, to account for potential endogeneity. The project contributed to the recent policy discussion on fiscal devaluation, and the ongoing policy debate on the global minimum corporate income tax.

Funded by the Anniversary Fund of the Oesterreichische Nationalbank (Project No. 18310).


May 2020 - September 2021

wiiw team Leader

Branimir Jovanović

wiiw Staff

Amat Adarov, Birgit Buschbom, Mario Holzner, Sandor Richter, Monika Schwarzhappel


Keywords: corporate income taxation, labour income taxation, fiscal devaluation, international trade, profit shifting, FDI

Countries covered: EU, OECD

Research Areas: Macroeconomic Analysis and Policy, International Trade, Competitiveness and FDI