ATJ Asian Tax Journal

Asian Tax Journal

Print ISSN 1738-3323 Online ISSN 2733-9270

The Effect of Employment Promotion on Tax Credit

  • Chung－Jin Shim Konkuk University
  • Juneq Lee Kyung Hee University

Asian Tax Journal Vol. 12 No. 2 (2011), pp. 435-454

Abstract

This study examines how employment promotion on tax credit affects the labor demand. Employment promotion on tax credit actually induces the company to save money because the company receives a tax credit. The results are as follows：The results of the relationship between employment promotion on tax credit and labor demand is that employment promotion on tax credit is significantly and positively associated with labor demand. Labor demand is largely and positively affected by the sales as well as the equipments. But leverage variable is negatively associated with labor demand. This study finds that there are different the effect of employment promotion on tax credit between service industries and non－service industries during the period of applied tax credit. The effect of employment promotion on tax credit deflated by the wage in service industries is more positively associated with labor demand than that of the non－service industries. By additional result, the labor demand gap of the relationship between the next year of closed employment promotion on tax credit and the period of applied employment promotion on tax credit is large. During the next year(2006) of closed tax credit period(2005), the labor demand is insignificantly and negatively associated with the employment promotion on tax credit. Our study suggests that the employment promotion on tax credit has positively impact on labor demand and it will give validity to a way of instruments on the tax policies.

Keywords

  • employment promotion
  • labor demand
  • tax policies

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Asian Tax Journal

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